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Indianapolis Power & Light (IPL), a subsidiary of The AES Corporation (AES - Analyst Report), received the regulatory approval for the construction of two natural gas projects. The company will construct a new 650 megawatt (MW) combined-cycle gas turbine (“CCGT”) power plant and convert two existing coal-fired units having a combined generation capacity of 200 MW to natural gas units.

The Indiana Utility Regulatory Commission (IURC) allowed IPL to invest $600 million for the construction of the CCGT power plant near Martinsville, IN. Additionally, IPL will spend $36 million to convert two existing coal-fired units to natural gas units at the Harding Street Generation Station. The total project cost of $636 million will comprise 45% equity and 55% non-recourse debt.

The company will start constructing the CCGT project in the third quarter of 2014 and it expects the project to come into operation in 2017. The conversion of the Harding Street units will be completed by early 2016.

AES Corporation continues to expand its existing operations worldwide. In the last six months, the company got final approvals for, or achieved financial closing on about 2,600 MW of projects in the United States, Chile, India and Panama. The company expects that these projects will start contributing to its earnings and cash flow growth over 2015 to 2018.

For 2014, the company has planned to invest $270 million largely in platform expansions at IPL and Gener's Guacolda generation business. AES Corp. reaffirmed its 2014 adjusted earnings guidance in the range of $1.30 to $1.38 per share primarily due to the continuation of dry hydrological conditions in Latin America. The Zacks Consensus Estimate for 2014 earnings is pegged at $1.34 per share.

Currently, the company holds a Zacks Rank #3 (Hold). Other better-ranked stocks in this sector include Black Hills Corporation (BKH - Snapshot Report), Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report) and Calpine Corp. (CPN - Snapshot Report), carrying a Zacks Rank #1 (Strong buy).

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