A business wing of Pinnacle West Capital Corporation PNW, Arizona Public Service Company (“APS”), completed a 500 kilovolt transmission project called HANG2 connecting Phoenix to Yuma. This is the biggest transmission construction project completed by APS in two and a half decades.
The $200 million project will provide reliable services to customers in the Yuma region and the southwestern deserts. The 110-mile transmission line spans from the Hassayampa substation (near the Palo Verde Nuclear Generating Station) to the North Gila substation in Yuma.
While planning on the HANG2 line started more than a decade ago, its construction commenced in Aug 2013. Capacity expansion has become a necessity given the rising population in southwest Arizona. Per census data, Yuma County ranks third among the fastest growing areas in the U.S. with its population increasing 27% since 2000.
Arizona on the whole is also witnessing a gradual economic recovery fueled by a rapidly developing Phoenix Metropolitan Area, which includes much of the central part of the state.
Pinnacle West believes that 2015 holds better growth prospects in terms of job, income, consumer spending and commercial and residential settlements. These factors will lead to steady customer additions which will bolster the company’s revenues. In the first quarter, customer count at APS grew 1.2% year over year. The company expects retail customer growth of 2–3% annually from 2015 to 2017 and about 1.5–2.5% in 2015.
Besides expansion of transmission lines, Pinnacle West has set aside $3.5 billion from 2015 through 2017 for boosting its generation and distribution business.
Pinnacle West currently carries a Zacks Rank #2 (Buy).
Other Stocks
Other well-ranked stocks in the electric utility space are DTE Energy Company DTE, CMS Energy Corp. CMS and Alliant Energy Corporation LNT. All three stocks also have a Zacks Rank #2.
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