(ED) Consolidated Edison in 50-50 Partnership with Sempra

Consolidated Edison (ED) announced it would acquire a 50% stake in two solar farms owned by Sempra U.S. Gas & Power, a subsidiary of Sempra Energy (SRE), under construction in Nevada and Arizona.

Consolidated Edison and Sempra will each own a 50% interest in the two solar facilities, the Copper Mountain Solar 2 plant and the Mesquite Solar 1 power plant.

Located in Boulder City, Nev., the Copper Mountain Solar complex is currently one of the largest photovoltaic (“PV”) solar plants in the U.S. Construction of the farm began in late 2011. Phase 1 of Copper Mountain Solar 2 is complete and the plant is currently generating 92 megawatt (“MW”) of clean solar power. The second phase of the 150 MW plant is expected to be completed by 2015. Post completion, the plant will have the capacity to power approximately 45,000 homes.

Also, the plant fulfills its Corporate Social Responsibility (“CSR”). On an average, the plant has created about 175 construction jobs and eight more positions to operate the facility.

Construction of Mesquite Solar 1 power plant located in Phoenix, Ariz. began in 2011. The clean energy generated from the plant lowers greenhouse gases by about 190,000 tons on an annual basis, which is approximately equal to taking 33,000 cars off the road. Like Copper Mountain, Mesquite Solar also carries out its CSR. At its peak construction period, the project created 528 local construction jobs and 10 long-term positions. Once completed, Mesquite Solar is positioned to be North America’s largest PV solar power installation.

Under a 25-year agreement, all the electricity generated from both these plants will be sold to Pacific Gas & Electric, a subsidiary of PG&E Corp. (PCG).

The transaction will improve Consolidated Edison’s presence in the U.S. Besides, expanding its footprint in the renewable energy market, this transaction will give the company strategic renewable assets that have strong project fundamentals.

Going forward, the company’s robust portfolio of regulated utility assets provides a steady earnings base and significant growth prospects for the long run. Moreover, Consolidated Edison continues to deploy Smart Grid technologies and energy efficiency programs. These efforts will enhance system performance and provide energy savings for businesses and residential customers.

However, we remain concerned about the expected lower demand for electricity, earnings dilutive issuances and regulatory risks faced by the company. The company presently retains a short-term Zacks Rank #3 (Hold). In the near term, we would advise investors to accumulate its short-term Zacks Rank #2 (Buy) peer Entergy Corporation (ETR).

CONSOL EDISON (ED): Free Stock Analysis Report

ENTERGY CORP (ETR): Free Stock Analysis Report

PG&E CORP (PCG): Free Stock Analysis Report

SEMPRA ENERGY (SRE): Free Stock Analysis Report

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