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PPL Buys Narragansett Electric, Expands Renewable Operation

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PPL Corporation (PPL - Free Report) announced that it has completed the acquisition of Narragansett Electric Company from National Grid for nearly $3.8 billion along with $1.5 billion in debt. The total value of the deal is estimated at $5.3 billion. The deal will benefit PPL by further adding 780,000 customers to its existing customer base of 2.5 million in the United States.

Immediately after closing the deal, PPL rebranded Narragansett Electric as Rhode Island Energy. The new brand name will stand as a symbol of commitment for transmitting clean and reliable energy to customers in Rhode Island.

Rationale Behind the Acquisition

The acquisition is the second step by the utility to re-establish its position as a U.S.-focused energy company. The deal will give PPL a more diversified asset portfolio, lowering the percentage of income received from coal generation and expanding chances to invest in a sustainable energy future.

PPL sold its U.K. operation to concentrate on its domestic utility operation and the acquisition of Narragansett Electric will complement PPL’s existing domestic operations.

Zacks Rank & Price Performance

Currently, PPL carries a Zacks Rank #4 (Sell). In the past three months, shares of PPL have rallied 14.4% compared with the industry’s 8.4% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Utilities Lowering Emission & Adding Customers

Electric utilities are continuously expanding their customer base and targeting lower carbon emissions. A few utilities have decided to add more renewable sources to their portfolio and aim to achieve carbon neutrality within 2050, including Xcel Energy (XEL - Free Report) , Alliant Energy (LNT - Free Report) and IDACORP (IDA - Free Report) .

Xcel Energy recorded an improvement of 1.1% in the electric and natural gas customer base in the first quarter of 2022. Xcel Energy aims at an 87% carbon emission reduction by 2030 and net-zero emission targets by 2050.

For the first quarter, Alliant Energy’s retail electric and gas customers grew 0.7% and 0.6% year over year, respectively, and the growth is expected to continue in the future. Alliant Energy aims to retire all existing coal-fired generation units by 2040 to lower emissions from the 2005 levels by 50% and 100% within 2030 and 2050, respectively.

In 2021, IDACORP’s regulated Idaho Power’s customer base improved by 2.8% from the 2020 levels. The trend is expected to continue as an improvement in economic conditions will bring more customers. IDACORP aims to make systematic investments to provide 100% clean energy for customers by 2045.

The long-term earnings growth of XEL, LNT and IDA is projected at 6.4%, 5.7% and 4.4%, respectively.

The Zacks Consensus Estimate for 2022 earnings per share of Xcel Energy, Alliant Energy and IDACORP has moved up 6.8%, 4.6% and 3.1% year over year, respectively.
 


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PPL Corporation (PPL) - free report >>

Xcel Energy Inc. (XEL) - free report >>

IDACORP, Inc. (IDA) - free report >>

Alliant Energy Corporation (LNT) - free report >>