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
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
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.