Utilities have been busy this week, making moves to maximize profit potential. With new coal closings and fresh starts into natural gas, here's what you need to know to stay on top of your dividend stocks' latest moves.
FirstEnergy Corp. (NYSE:FE) is out 2,080 MW
FirstEnergy Corp. (NYSE:FE) announced
earlier this week that it plans to close down two Pennsylvania coal-fired power plants by the end of October, knocking 2,080 MW off its total generation capacity.
In its press release, the company noted that a combination of cheap electricity and costly environmental regulations tipped the scales on coal's cost-competitiveness for these two plants. FirstEnergy Corp. (NYSE:FE) estimated that while the plants' generation amounts to around 10% of total capacity, the plants' environmental compliance costs would've accounted for around 30% ($280 million) of the company's total spending.
Along with nine other plants already on the deactivation list, FirstEnergy Corp. (NYSE:FE) notes that "nearly 100 percent" of its electricity will now come from low- or non-carbon-emitting sources.
AEP is out 585 MW
American Electric Power Company Inc (NYSE:AEP)
followed in FirstEnergy's footsteps two days later, when it announced
the expected closure of a 585 MW Ohio coal-fired power plant. For the utility's American Electric Power Company Inc (NYSE:AEP)
Ohio subsidiary, this latest announcements brings its grand total to 3,123 MW of coal-fueled generation to be retired by 2016.
Just like FirstEnergy Corp. (NYSE:FE), American Electric Power Company Inc (NYSE:AEP) pointed the finger at environmental regulation as a main driver behind its ultimate decision. But unlike FirstEnergy Corp. (NYSE:FE)'s focus on cheap electricity prices, American Electric Power Company Inc (NYSE:AEP) kept its other reason generalized as "current market conditions." And while it expects to fully retire the plant, American Electric Power Company Inc (NYSE:AEP) did mention the possibility of a natural gas refuel.
Although the expected closure won't affect the utility's 2013 operating earnings, the company is taking a $150 million to $170 million non-operating pre-tax impairment charge for Q2 to account for the decision
Natural gas notions
American Electric Power Company Inc (NYSE:AEP) isn't alone in considering natural gas options over coal. TECO Energy, Inc. (NYSE:TE)
, one of the most coal-centric utilities
around, took another step this week toward ramping up its natural gas investments.
After announcing in May
that it would spend $950 million to buy out regulated New Mexico Gas Co. from Continental Energy Systems
, TECO Energy, Inc. (NYSE:TE) officially filed its acquisition approval application with state regulators this week.