Entergy Corporation to buy Union Power Station
Unregulated power companies feel the sting of sliding prices (Part 6 of 7)
Entergy in the news
Entergy Corporation (ETR) saw a couple of major developments in the week ending December 12, 2014. On Tuesday, Entergy announced its plans to buy a natural gas–fired power plant from Union Power Partners. And, on Thursday, an appellate court ruled in favor of Entergy in a determination that means the company won’t be required to obtain new coastal consistency state certification for its Indian Point nuclear units 2 and 3.
Entergy exempted from coastal consistency review
Entergy has the third-largest nuclear power generation capacity in the US after Exelon Corporation (EXC) and Duke Energy Corporation (DUK). Entergy owns 5,215 MW, or megawatts, of nuclear power generation capacity. Indian Point is a nuclear power generation facility located on the Hudson River.
The court exempted Entergy from coastal consistency review under the state’s Coastal Management Program. The ruling helps Entergy leave behind uncertainties about relicensing approvals for its Indian Point units 2 and 3.
Entergy to buy generation facility in Arkansas for half the price
In order to meet growing electricity demand, Entergy will buy the Arkansas-based Union Power Station generation facility from independent power producer, Union Power Partners. The deal is expected to close by the end of 2015.
The Union Power Station consists of four natural gas–fired power plants with a total capacity of 1,980 MW. Entergy will pay $948 million to acquire the facility. Considering a similar facility would cost almost double the price to build, Entergy’s purchase price seems like a good deal.
Entergy is part of the Select Sector Utilities Select Sector SPDR (XLU), which is a key exchange-traded fund in the power utilities sector.
There has been quite a lot of mergers and acquisitions activity in the power utility industry this year. Earlier this month, NextEra Energy Inc. (NEE) announced it would buy Hawaiian Electric Industries (HE) for $4.3 billion.
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