Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (PCG), has entered into a 25-year Power Purchase Agreement with enXco. Per the deal, PG&E will purchase the power generated from the Shiloh IV Wind Project owned, built and developed by enXco. The Wind Project is subject to the approval of the California Public Utility Commission.
The 100 megawatt (MW) Shiloh IV Wind Project will be built in Solano County, California. The facility is a re-powering effort to upgrade older technology that will increase the generation of clean energy with fewer wind turbines. As an integral part of the project, 235 existing Kenetech 100kW turbines are planned for removal. The renewable electricity generated from the facility would power approximately 40,000 homes.
Pacific Gas and Electric Company is committed to provide its customers with more of clean, renewable electricity. This agreement is another step towards the company’s long-term goal of developing, generating and purchasing more green energy to serve its customers.
enXco, an EDF Energies Nouvelles company, develops, constructs, operates and manages renewable energy projects throughout North America. enXco is a significant owner and developer of wind-energy installations and is the largest third-party operations and maintenance provider for wind farms in North America. With the completion of the current project, enXco’s portfolio will have five wind projects in the Montezuma Hills Wind Resource Area that can generate power totaling 505 MW and constitute over half of all wind energy facilities developed in Solano County.
PG&E Corporation’s supportive regulatory environment in California and forward looking rate cases ensure a steady stream of earnings and returns. Going forward, favorable decisions from regulators, long-term supply contracts, diversification into alternative power sources and infrastructure improvement programs bode well for the company.
These positives, however, will be partially offset by certain risks, including the present unfavorable macro backdrop, headwinds in the California economy, tepid demand for electricity, risk of penalties related to the San Bruno pipeline explosion and power-price volatility. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Recently, PG&E reported second quarter results with operating earning per share of $1.02 falling a penny short of the Zacks Consensus Estimate. However, earnings comfortably surpassed the year-ago number of 91 cents per share.
San Francisco, California-based PG&E Corporation is the parent holding company of California’s largest regulated electric and gas utility, Pacific Gas and Electric Company. Pacific Gas generates revenues mainly through the sale and delivery of electricity and natural gas to customers. It engages in the business of electricity and natural gas distribution; electricity generation, procurement, and transmission; and natural gas procurement, transportation, and storage. The company mainly competes with Sempra Energy (SRE).
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