Charlotte, NC-based Duke Energy Corporation DUK has received the approval of the Federal Energy Regulatory Commission (FERC) to sell its non-regulated Midwest Commercial Generation Business to the Texas-based electric utility provider Dynegy Inc. DYN. The transaction is valued at $2.8 billion in cash.
With this approval, Duke Energy has completed all the necessary conditions required to close the transaction. The deal is expected to close on Apr 2, 2015.
Duke Energy initiated the exiting process of its Midwest Commercial Generation Business in Feb 2014 as it considered the business not to be a strategic fit for its overall portfolio.
The deal includes selling interest in 11 power plants in Ohio, Illinois and Pennsylvania having a total capacity of 6,089 megawatts, Duke Energy Retail Sales and its competitive retail business in Ohio. The power plants are primarily coal and natural gas based while one is oil based.
Another electric utility, FirstEnergy Corp. FE is also gradually reducing its merchant fleet generation and expanding the regulated business so as to cushion itself from market volatilities. For this purpose, the utility is considerably expanding its regulated transmission business.
Last month, Duke Energy posted adjusted fourth-quarter 2014 earnings of 86 cents per share that came in below the Zacks Consensus Estimate of 88 cents by 2.3%. Quarterly earnings also decreased 14% from the year-ago figure. A strong performance at Commercial Power was more than offset by a weak International Energy business. Higher operating expenses also aggravated results.
The company expects 2015 adjusted earnings in the range of $4.55 to $4.75 per share and long-term adjusted earnings per share growth of 4% to 6% through 2017.
Duke Energy currently carries a Zacks Rank #3 (Hold). A better-ranked stock in this space is Enersis S.A. ENI, sporting a Zacks Rank #1 (Strong Buy).
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