Back to top

Analyst Blog

Edison Mission Group, a subsidiary of Edison International (EIX - Analyst Report), in collaboration with Nebraska Public Power District (“NPPD”) has begun the construction work on a new project known as The Crofton Bluffs project.

The Crofton Bluffs project is located in Knox County in northeast Nebraska which is approximately 15 miles south of the South Dakota border. Crofton Bluffs will comprise 22 wind turbines and have a generating capacity of 42 megawatts (MW) of electricity. Under a 20-year power purchase agreement, the power generated will be sold to NPPD and will be able to meet the energy needs of 14,000 homes in Nebraska.

The company expects this project to be completed by the end of 2012. The wind farm is estimated to contribute about $2.8 million to the state in sales tax revenues. Over the next 25 years, the project is expected to provide about $16 million in property and state tax revenues and lease payments to local landowners. Besides yielding profit, the project will help the company to achieve its goal of generating 10% of its energy from renewable resources.

As Nebraska provides plentiful wind resources and an economic and friendly environment that supports clean energy investment, Edison International has been continuously inking contracts with the state. This is Edison’s fourth wind energy project in Nebraska. The other three projects are Elkhorn Ridge project, the Laredo Ridge wind farm project near Petersburg in Boone County and the Broken Bow wind project in Custer County that is under construction.

The drive toward renewables is evident among most power producing companies. Sempra Energy (SRE - Analyst Report) is close to complying with California’s stringent Renewable Portfolio Standard program. The rules call for procuring 33% of power from renewable resources by 2020.

Recently, a Sempra subsidiary entered into a new power purchase agreement to buy 15 MW of solar energy from Silverado Power subsidiaries, Western Antelope Dry Ranch LLC in Lancaster, California, and Victor Mesa Linda B LLC in Victorville, California.

Coming back to Edison, the company presents a lower risk profile compared to its utility-only peers due to its strong portfolio of regulated utility assets and well-managed merchant energy operations. Going forward, key growth drivers are California's supportive regulatory environment, ongoing alternative energy projects and steep growth in the rate base.

However, several factors continue to weigh on Edison International, including a tepid economy, volatile gas prices, imminent expiry of its cheap rail transport contract and the recovery of capital expansion costs. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

California-based Edison International is a utility holding company operating through its principal subsidiaries: Southern California Edison Company, Edison Mission Energy, and Edison Capital.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%