Nine of these power plants are in Ohio, a market that faces significant regulatory uncertainties. The other two plants are located in Pennsylvania and Illinois, another problematic state.
Five of these power plants burn coal, while another five burn natural gas and one runs on oil. Although the coal-fired plants have any array of equipment to control CO2 emissions, adverse regulation remains a threat to these facilities. The gas- and oil-fired plants, on the other hand, have exposure to volatile feedstock prices.
The sale will require approval from the Federal Energy Regulatory Commission and antitrust clearance from the US Dept of Justice. Neither should pose a problem; the deal should close by the end of the year.
This transaction does not include AES Corp’s (NYSE: AES) ownership interest in several of the plants, though the company has put these assets on the market. Nor does it include Duke Energy’s regulated distribution and transmission assets in Ohio, which will continue to earn a steady rate of return that’s shielded from the turmoil in the wholesale generation market.
Invest Smarter! Join Conrad’s Utility Investor!
Smart investing. Taking advantage of real opportunities and not fads (and knowing the difference). Finding the companies and stocks that will deliver for the long haul, so investing lets you live instead of investing turning into your life. Roger Conrad has dedicated his career to these principles—and that’s what Conrad's Utility Investor delivers.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
Harness the tried and true wealth-building power of rising dividends.
Nothing compounds wealth like reinvesting a rising stream of dividends.
Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.