POM & DC Water to Build a CHP Plant

Pepco Holdings, Inc.’s (POM - Analyst Report) subsidiary Pepco Energy Services, Inc. and DC Water have entered into an agreement. As per the agreement, DC Water has been assigned the task of designing, building and operating a Combined Heat and Power (“CHP”) plant at the Blue Plains Advanced Wastewater Treatment Plant (“AWTP”). AWTP is maintained by DC Water.

The Blue Plains facility collects used water from the region and recycles it. The digester installed at the plant converts the waste into energy. The Blue Plains’ AWTP project covers around 725 square miles of DC, Maryland and Virginia and has a total capacity of 370 million gallons of water per day.

The construction of the new project will commence in August 2012. The cost of construction is pegged at $81 million and involves the designing and development of the CHP project with the use of biogas from the AWTP facility. It will generate 14 MW of electric power and account for approximately 30% of AWTP’s average power demand.

The company has also secured another 15-year contract worth $89 million related to on-site operations and maintenance services.

The CHP plants are high-efficiency embedded energy infrastructures with reliable and hassle-free operations. This newly announced CHP plant is a part of DC Water’s new thermal hydrolysis and anaerobic digestion project. It involves utilization of high-pressure steam from the CHP plant to raise the rate of biogas production and neutralize contaminants in waste streams.

Pepco Energy Services Inc. is a leader in energy savings performance contracting. It provides measurement and verification services, along with equipment maintenance over the entire contract term. Implementation of these kinds of recycling measures has enabled the company to save $210 million for its clients over the last ten years.

The company received an energy performance and maintenance contract, valued at $27.6 million, from the Maryland Port Administration in November, 2011. The contract extends over a period of 13.5 years. We appreciate the measures implemented by the company to lower greenhouse gas emissions and at the same time minimize the waste disposal costs incurred by its clients.

Based in Washington, District of Columbia, Pepco Holdings is involved in the transmission and distribution of electricity, as well as delivery and supply of natural gas. The company’s major peers include FirstEnergy Corp. ((FE - Analyst Report) and Constellation Energy Group Inc. ((CEG).

Pepco Holdings currently retains a Zacks #4 Rank (short-term Sell rating).