Entergy (ETR) Concludes Palisades Power Plant Sale to Holtec
Entergy Corporation ETR recently announced that the sale of its Palisades Power Plant to Holtec International has reached completion. This enables the company to attain its goal of focusing on its utility operations in the Gulf South and fulfilling its intent of exiting the nuclear merchant power business.
Impressively, the site has been decommissioned after supplying safe, clean and reliable energy to customers for more than 50 years. Also, the deal highlights the transfer of the ownership of the decommissioned Big Rock Point site in Charlevoix, MI, from Entergy to Holtec.
Rationale Behind the Deal
To reduce volatility at its Entergy Wholesale Commodities (“EWC”) business, ETR took a decision to cease merchant power generation at all EWC power plants by mid-2022.
As part of this decision, in January 2019, Entergy wrapped up the sale of its Vermont Yankee nuclear power plant to the subsidiaries of NorthStar Group Services. In 2019, the company signed an agreement to sell 100% of the equity interests in its subsidiaries owning its nuclear plants — Indian Point 1, Indian Point 2 and Indian Point 3 — for decommissioning. As expected, the transaction concluded in May 2021.
This strategy of shutting down its merchant power business seems to be attractive as regulated spending offers a secured rate of return.
Entergy’s Current Nuclear Plant & Renewable Portfolio
With the final exit from merchant power generation at all EWC nuclear power plants, Entergy continues to supply safe and secure energy through four of its nuclear power stations in Arkansas, Louisiana and Mississippi. With nuclear being a zero-emission clean energy source, these nuclear plants of Entergy will enable it to duly achieve its net-zero emission target by 2050.
Thus, it is imperative to mention that Entergy has nearly doubled its renewable capacity over the past three years as part of its goal to add more than 2,500 megawatts (MW) of capacity by the end of 2025 and more than 5,000 MW of renewables by 2030.
Peer Moves
Utilities in the United States are gradually moving to energy sources that entail lower emissions and, in this attempt, steadily replacing their coal-fired generation fleet with clean, safe and secure energy from natural gas and renewable modes.
In this context, utilities that have deployed their efforts in attaining a carbon-free environment through natural gas sources in the process of serving customers clean energy and benefiting from this next-generation energy include:
In June 2022, CenterPoint Energy CNP announced that its Indiana-based electric utility business, CenterPoint Energy Indiana South, received the approval for the construction of natural gas generation.
CenterPoint Energy boasts a long-term earnings growth rate of 3.9%. Shares of CNP have returned 18.7% in the past year.
In June 2022, DTE Energy Company DTE announced that its Blue Water Energy Center, a 1,150 MW combined-cycle natural gas-fired power plant has begun commercial operation and will provide cleaner, reliable and affordable power for 850,000 customer homes in southeast Michigan.
The long-term earnings growth rate of DTE Energy is pegged at 6%. DTE shares have rallied 5% in the past six months.
In June 2022,Constellation Energy Corporation’s CEG management recently announced its clean energy transition plan to achieve net-zero emission. Constellation Energy will rely more on its nuclear power units and utilize new technologies to lower emission and maintain grid reliability.
Constellation Energy boasts a long-term earnings growth rate of 20.5%. CEG shares have appreciated 9.6% in the past year.
Price Performance
Shares of ETRhave rallied 11.3% in the past year compared with the industry’s growth of 5.5%.
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Zacks Rank
Entergy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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