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NextEra to Cut Pollution with Shutdown of Coal-Fired Plant
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NextEra Energy (NEE - Free Report) announced that its subsidiary, Florida Power & Light Company (“FPL”), has decided to cease operations of the Cedar Bay Generating plant, a 250-megawatt (MW) coal-fired plant located in Jacksonville, FL, on Dec 31, 2016.
The decision to shut down the plant didn’t come as a surprise given that FPL had made its intentions clear when it acquired the same.
Benefits of the Wind-Down
Prior to the acquisition, FPL was obligated to purchase power from the previous owner of the Cedar Bay power plant under a 1988 Power Purchase Agreement. However, the agreement has become uneconomic now that FPL has the ability to generate more clean energy at a much lower cost by investing in system modernization.
Shutting down the Cedar Bay plant will allow FPL to lower carbon emissions by 1 million tons a year. Thanks to its consistent investment in upgrading the generation fleet, FPL has already achieved the state’s 2030 carbon emissions rate goal, which was outlined by the U.S. Environmental Protection Agency's (EPA) Clean Power Plan.
Ceasing operations of the plant will lower the cost of power generation, leading to savings of $70 million for customers.
FPL’s Unique Approach to Cut Pollution
Buying old, inefficient coal-fired plants to eventually shut them down is undeniably a unique way of reducing carbon emissions. Note that FPL followed up the Cedar Bay shutdown with the purchase of another coal-fired power plant, located in Indiantown, FL, with the intention of shutting it down.
Closure of the Indiantown plant will result in annual savings of $129 million for FPL customers and allow the company to lower carbon emission by 657,000 tons per year.
Industry Outlook
Historically, electric utilities have relied heavily on coal for power generation, which has now proven to be a big challenge for environmental preservation.
The U.S. Environmental Protection Agency (EPA) came up with a new plan to curb carbon pollution from domestic power plants. The finalized Clean Power Plan calls for CO2 reduction of 28% by 2025 and 32% by 2030 from the 2005 levels.
Utilities like Dominion Resources (D - Free Report) and DTE Energy (DTE - Free Report) are investing consistently to expand their green generation portfolio and lower emission.
Price Movement
Shares of NextEra have returned 14.1% over the last 12 months, outperforming the Zacks categorized Utility – Electric Power industry’s gain of 0.3%.
The company is a consistent performer and has surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average positive surprise of 7.2%. NextEra stands to benefit from the positive economic fundamentals, which will help it to achieve the targeted compound annual earnings growth rate of 6% to 8% through 2018 off a 2014 base. These developments will have a positive impact on its performance going forward.
In the third quarter of 2016, Ameren Corporation (AEE - Free Report) , another Zacks Rank #2 stock, surpassed the Zacks Consensus Estimate by 10.1%. In the last 60 days, estimates for the full year were up 6.7% to $2.70.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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NextEra to Cut Pollution with Shutdown of Coal-Fired Plant
NextEra Energy (NEE - Free Report) announced that its subsidiary, Florida Power & Light Company (“FPL”), has decided to cease operations of the Cedar Bay Generating plant, a 250-megawatt (MW) coal-fired plant located in Jacksonville, FL, on Dec 31, 2016.
The decision to shut down the plant didn’t come as a surprise given that FPL had made its intentions clear when it acquired the same.
Benefits of the Wind-Down
Prior to the acquisition, FPL was obligated to purchase power from the previous owner of the Cedar Bay power plant under a 1988 Power Purchase Agreement. However, the agreement has become uneconomic now that FPL has the ability to generate more clean energy at a much lower cost by investing in system modernization.
Shutting down the Cedar Bay plant will allow FPL to lower carbon emissions by 1 million tons a year. Thanks to its consistent investment in upgrading the generation fleet, FPL has already achieved the state’s 2030 carbon emissions rate goal, which was outlined by the U.S. Environmental Protection Agency's (EPA) Clean Power Plan.
Ceasing operations of the plant will lower the cost of power generation, leading to savings of $70 million for customers.
FPL’s Unique Approach to Cut Pollution
Buying old, inefficient coal-fired plants to eventually shut them down is undeniably a unique way of reducing carbon emissions. Note that FPL followed up the Cedar Bay shutdown with the purchase of another coal-fired power plant, located in Indiantown, FL, with the intention of shutting it down.
Closure of the Indiantown plant will result in annual savings of $129 million for FPL customers and allow the company to lower carbon emission by 657,000 tons per year.
Industry Outlook
Historically, electric utilities have relied heavily on coal for power generation, which has now proven to be a big challenge for environmental preservation.
The U.S. Environmental Protection Agency (EPA) came up with a new plan to curb carbon pollution from domestic power plants. The finalized Clean Power Plan calls for CO2 reduction of 28% by 2025 and 32% by 2030 from the 2005 levels.
Utilities like Dominion Resources (D - Free Report) and DTE Energy (DTE - Free Report) are investing consistently to expand their green generation portfolio and lower emission.
Price Movement
Shares of NextEra have returned 14.1% over the last 12 months, outperforming the Zacks categorized Utility – Electric Power industry’s gain of 0.3%.
The company is a consistent performer and has surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average positive surprise of 7.2%. NextEra stands to benefit from the positive economic fundamentals, which will help it to achieve the targeted compound annual earnings growth rate of 6% to 8% through 2018 off a 2014 base. These developments will have a positive impact on its performance going forward.
Zacks Rank & Key Pick
NextEra Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the third quarter of 2016, Ameren Corporation (AEE - Free Report) , another Zacks Rank #2 stock, surpassed the Zacks Consensus Estimate by 10.1%. In the last 60 days, estimates for the full year were up 6.7% to $2.70.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>