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Entergy's Texas Unit Withdraws from Power Plant Purchase - Analyst Blog

Zacks Equity Research
Updated

After confronting opposition from industry groups and the state of Texas, Entergy Corporation’s ETR wing – Entergy Texas, Inc. – has filed a motion with the Public Utility Commission of Texas (“PUCT”) requesting to dismiss the company's previous application for a Certificate of Convenience and Necessity to acquire one of the four 495 megawatt (“MW”) generating units at the Union Power Station near El Dorado, AK.

The PUCT approval will dissolve Entergy Texas’ request to purchase the unit and thereupon the unit will be acquired by another Entergy subsidiary, Entergy New Orleans, Inc. Subject to approval of New Orleans City Council and other conditions, the facility will be acquired at an unadjusted purchase price of $237.0 million.

The 1,980 MW Union Power Station is owned by Entegra TC LLC’s wholly owned subsidiary Union Power Partners, L.P., an independent power producer. The facility comprises four highly efficient combined-cycle natural gas-fired generating units.

This news is a follow-up of Entergy Corporation’s announcement made in Dec 2014. The utility had announced that three of its subsidiaries – Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C. and Entergy Texas, Inc. – have entered into an agreement to acquire the Union Power Station.

While Entergy Gulf States Louisiana had settled to acquire two of the four units, Entergy Arkansas and Entergy Texas were in agreement to acquire one facility each. The plant’s total purchase price of $948.0 million is roughly half the cost to build a comparable new combined-cycle facility.

With a minor modification to the acquisition contract, the purchase of the entire Union Power Station facility remains on track to be completed by the end of this year.

Zacks Rank

New Orleans, LA-based Entergy Corporation currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the electric utility space include Empresa Nacional de Electricidad S.A. EOC and Enersis S.A. ENI, sporting a Zacks Rank #1 (Strong Buy) and DTE Energy Company DTE, carrying a Zacks Rank #2 (Buy).

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ENTERGY CORP (ETR): Free Stock Analysis Report
 
DTE ENERGY CO (DTE): Free Stock Analysis Report
 
ENERSIS S A ADR (ENI): Free Stock Analysis Report
 
ENDESA-CHILE (EOC): Free Stock Analysis Report
 
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