Xcel Energy Inc. XEL recently announced that it is going to divest its 760 MW natural gas-fired power plant ¬— the Mankato Energy Center — to Denver-based independent power producer Southwest Generation for $680 million. The deal is expected to close in the third quarter of 2020.
This non-regulated asset sale is in sync with the company’s focus to become a fully-regulated utility company. The sales proceeds will not only reduce the company’s overall financing needs and improve its credit metrics, but will also utilize the net gain to fund corporate donations and support COVID-19 relief efforts.
Utilities to Fight Crisis Created by COVID-19
The coronavirus pandemic has created a panic and is spreading at an alarming rate. Despite various measures, the number of infected people is increasing each day. Per Johns Hopkins University and Medicine, the virus has infected 368,449 people in the United States, while 19,919 patients have recovered. People are maintaining social distancing and are staying at home to stop the spread of this virus. Utilities are providing basic services like electric, water, and natural gas as well as helping millions of customers who are staying back at home to fight COVID-19.
Xcel Energy, being one of the prominent Utility - Electric Power company, is providing power to millions of homes and businesses across eight Western and Midwestern states. The recent deal will not hamper the steady flow of electricity to the company’s Upper Midwest customers as Xcel Energy will continue to buy power from this facility and provide electricity.
Infrastructure Strengthening is Essential
To maintain uninterrupted power supply, electric utilities need to maintain and upgrade their old infrastructures. The capital investment is directed toward transmission, distribution, electric generation and renewable projects. Xcel Energy continues to invest substantially in its utility assets to provide reliable services to customers and effectively meet rising electricity demand. In addition to Xcel Energy, utilities like NextEra Energy NEE, Duke Energy Corporation DUK and FirstEnergy Corporation FE among others are also making investments to strengthen their infrastructures.
Zacks Rank & Price Performance
The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 12 months, shares of the company have returned 10.5% against the industry’s decline of 13.1%.
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FirstEnergy Corporation (FE) : Free Stock Analysis Report
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