PPL Corp. Sells Three Hydro Plants - Analyst Blog

Electric utility PPL Corporation (PPL) successfully sold its remaining three hydroelectric generating facilities in Maine to the Penobscot River Restoration Trust, with a view to protecting the Atlantic salmon and other migratory fishes in Maine's Penobscot River. PPL Corp. will receive roughly $24 million for the sale.

PPL Corp. had reached a deal with a coalition of environmental groups and governmental agencies in 2004 to sell these facilities on the grounds of environmental protection.

Additionally, PPL Corp. will also receive $14 million in contingent consideration from Black Bear Hydro Partners LLC, an affiliate of ArcLight Capital Partners LLC, relating to the rights to increase output at certain hydroelectric facilities in Maine, which PPL had sold to Black Bear in late 2009. These conditional expansion rights and associated obligations were part of PPL Corp.'s original agreement with the coalition, and were transferred to Black Bear as part of the 2009 sale transaction.

The recent sale transaction along with the consideration from Black Bear is expected to result in a special after-tax gain of $0.03 - $0.04 per share in the fourth quarter of 2010. However, PPL Corp. reaffirmed its fiscal 2010 adjusted earnings forecast in the range of $2.80 − $2.95 per share compared to $1.95 earned in fiscal 2009.

The Zacks Consensus earnings estimates for the fourth quarter, fiscal 2010 and fiscal 2011 are 59 cents, $2.86 and $2.65, respectively.

Allentown, Pennsylvania-based PPL Corporation is a diversified utility company, primarily generating and marketing electricity in two key markets − the northeastern and western U.S. Through its subsidiary, PPL Electric Utilities, the company provides electric delivery services to about 1.4 million customers in Pennsylvania.

We maintain our long-term Neutral recommendation on the stock. PPL Corp. currently has a short term Zacks #3 Rank (Hold). The company ranks at par with its closest peers, FirstEnergy Corp. (FE) and Exelon Corp. (EXC).

 
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