Louisiana Generating, a business wing of Princeton utility NRG Energy Inc. (NRG - Free Report) , announced that it will carry on with its emission cutback plans at its Big Cajun II Electrical generating facility in Louisiana. The cost involved in upgrading the facility is well within NRG Energy’s targeted capital spending plans. These measures will enable the company to continue providing affordable power services to customers in the region.
The decision to reduce emission levels came in the wake of the government’s Mercuric Air Toxics Standards (MATS) which comes into effect from April 2015. Louisiana Generating will switch one of its coal-fired plants to natural gas resulting in the removal of mercury and particulate emissions from the unit.
Apart from resolving the issues related to the charges by the Environmental Protection Agency (“EPA”) and Louisiana Department of Quality, the company plans to install Selective Non-Catalytic Reduction (“SNCR”) control equipment to diminish nitrogen oxide on all three units and the sought after Dry Sorbent Injection technology on Unit 1 to slash sulfur dioxide discharge. The company also intends to install activated carbon injection in one unit and upgrade the electro precipitators.
The company initiated its modernization program by modifying the burners and fuel which led to reduction in nitrogen dioxide (NOx) and sulphur dioxide (SO2) emissions after the purchase of the Big Cajun facility by a third. The coal-to-gas switching and other technological upgrades are expected to be completed by 2015 taking into account scheduled outages.
NRG Energy will continue to pursue its pro-environment objectives at the Big Cajun facility and at the same time provide clean as well as low-cost services which will help the company in securing its existing customer base. Moreover, conversion to natural gas energy source will bode well with NRG Energy’s future growth prospects.
The Zacks Consensus Estimates for the fourth quarter and full year 2012 currently stand at 13 cents and 82 cents per share, respectively.
The company’s northeast operations were hit by Hurricane Sandy which caused damages to power infrastructures and exacerbated costs. We believe this will put pressure on margins in the upcoming quarters. However, NRG Energy’s recent 11-year contract extension for power supply to a Washington-based electric co-operative could provide some relief. Given the pros and cons, the company in the short term retains a Zacks #3 Rank (Hold rating).
Another utility player presently having a short-term Zacks #3 Rank (Hold rating) is Virginia-based The AES Corporation (AES - Free Report) .
We believe the installation of these new emission control equipment would prove to be more economical than scrapping the units altogether and building new generation units.
New Jersey-based NRG Energy Inc. is a wholesale power generation company engaged in the ownership, development, construction, and operation of power generation facilities. With a market capitalization of $4.52 billion, the company has 5,193 full-time employees.