Duke Energy Corporation (DUK - Analyst Report) announced that its Buck and Riverbend steam stations, coal-fired power plants in the Charlotte area, will retire two years earlier than scheduled. Earlier, both stations had been slated for retirement in Apr 2015 in apprehension of upcoming federal environmental regulations. However, the company elected to retire Buck Units 5 and 6 and Riverbend Units 4 through 7 on Apr 1, 2013. A total of 65 employees work at these plants.
The aforementioned units have been operating infrequently in recent years and in the future would have operated even less with the recent completion of new, more efficient plants and low natural gas prices.
Of late, the company has been investing in new plants, retiring older plants as well as working on modernization and upgrade of plants to reduce emissions across its service area. Since 2007, the company has invested approximately $6 billion in new plants and has retired up to 6,800 megawatts of older coal capacity. All the more, it has invested another $7.5 billion for plant upgrades.
These developments indicate the company’s commitment to meeting electricity needs through advanced and cleaner generation while fetching revenues at the same time. Also, the acquisition of Progress Energy Inc. seems to be a smart move made by the company. It has increased the company’s ability to build new power plants to meet future greenhouse-gas emissions limits.
However, valuation continues to be restrained by a number of factors, including the present unfavorable macro backdrop, predominantly fossil-fuel based generation assets, tepid demand for electricity, foreign currency exchange volatility, pending regulatory cases and the aftermath of Hurricane Sandy. New Jersey, where Duke Energy has about 65% of its customers, was hit hardest by Sandy. Other hard-hit states include Connecticut, West Virginia, New York and Rhode Island. Duke Energy presently retains a short-term Zacks Rank #3 (Hold).
Based in Charlotte, North Carolina, Duke Energy is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses, which supply, deliver, and process energy for customers in North America and selected international markets. Duke Energy Corporation’s U.S. electricity and gas operations are spread over the Carolinas, Florida, Indiana, Kentucky and Ohio that help in generating a relatively stable and growing earnings stream.
Earlier, the acquisition of Progress Energy in July 2012 made Duke Energy the largest U.S. utility in terms of market capitalization. Prior to that, Chicago-based Exelon Corporation (EXC - Analyst Report) was the largest U.S. utility.
In the electric utility space Ameren Corporation (AEE - Analyst Report) and Pike Electric Corporation display better fundamentals and currently hold a Zacks Rank #1 (Strong buy).