Edison Finances Wind Project - Analyst Blog

Edison Mission Energy (EME), a subsidiary of Edison International (EIX), successfully completed a $75 million debt financing for its $190 million High Lonesome Mesa, New Mexico, wind project. EME funded the balance of project cost through an equity contribution and a Treasury cash grant.

Edison's $75 million financing for the project includes $50 million of bonds issued by the New Mexico Renewable Energy Transmission Authority (NMRETA), the proceeds being loaned to the High Lonesome project, and $25.255 million issued directly by the project.

Both bonds carry an interest rate of 6.85% and mature in seven years.

Edison's $190 million project is located in Torrance County, about 90 miles southeast of Albuquerque. The company had started working on the project in July 2009.

Presently, the project site generates roughly 100 megawatts of electricity through the operation of 40 wind turbines manufactured by Clipper Windpower. Electricity produced at the site is sold to Arizona Public Service under long-term contracts.

Based in Rosemead, California, Edison International engages in the supply of electric energy in central, coastal and southern California. The company's principal subsidiaries include Southern California Edison Company, Edison Mission Energy and Edison Capital.

Edison Mission Energy is a subsidiary of Edison Mission Group, which is one of the largest developers of wind energy projects in the U.S. The group currently has a portfolio of 29 projects in operation or under construction in 10 states with a total generating capacity of more than 1,800 megawatts.

Edison Mission Group's reported earnings in the most recent quarter rose 79% year over year to 34 cents per share. On the whole, Edison International's adjusted earnings in third-quarter 2010 were $1.46 versus $1.09 in the comparable year-ago period.

On the third quarter earnings call, Edison International raised its earnings estimates for 2010 to $3.45–$3.60 per share from the previous guidance of $3.15–$3.45, based on strong year-to-date performance. The Zacks Consensus Estimates for fourth quarter 2010, fiscal year 2010 and fiscal year 2011 are 64 cents per share, $3.50 per share and $3.00 per share, respectively.

We maintain our long-tern Neutral rating on Edison International. The company currently has a Zacks #3 Rank (short-term Hold rating). The company's major peers, American Electric Power Co. Inc. (AEP), Exelon Corp. (EXC) and PG & E Corp. (PCG), also carry the same rank.

 
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