Chicago-based Integrys Energy Group Inc. (TEG) furthers its strategy of downsizing its non-regulated operations by selling all of its Texas retail electric marketing business. The sale of Integrys Energy Services Inc.’s Texas business reduces the size and scope of Integrys’ non-regulated marketing and energy services operations.
Integrys’ Texas electric marketing unit sells electricity to small businesses and industrial customers from multiple sources, unlike in regulated markets. In the regulated markets, customers typically don’t have much choice but to buy electricity from the local utility.
Integrys did not disclose the financial terms or the name of the buyer involved in the sale. However, Integrys expects to reduce collateral support requirements by $50 million once the sale is completed.
Integrys had initiated the process of scaling back its non-regulated operations in early 2009. Since then, the company has sold its power generation assets in northern Maine and New Brunswick; its wholesale electric marketing and trading business; and its Environmental Markets business.
To date, the company has cut down its capital investment for the business by $700 million and collateral needs by $1.4 billion. Looking ahead, the company appears to be on track for shrinking its collateral requirements to $500 million by year-end 2010, cutting down roughly another $800 million.
Integrys Energy Services, a wholly-owned non-regulated subsidiary of Integrys Energy Group, continues to operate its retail natural gas and electric marketing businesses in the Northeastern U.S., and continues develop solar and other renewable projects in selected areas in the country.
Furthermore, Integrys Energy Services also owns and operates approximately 240 megawatts of conventional (fueled by natural gas, oil and diesel) merchant power generating units in New York, Wisconsin and Pennsylvania. Going forward, the company expects to sell these assets when an appropriate opportunity arises.
Integrys Energy Group is a diversified holding company providing products and services in both regulated and non-regulated energy markets, through its subsidiaries. The company also owns a 34% equity ownership interest in American Transmission Company LLC, an electric transmission company operating in Wisconsin, Michigan, Minnesota and Illinois.
The company is interested in retaining a smaller-scale non-regulated energy services subsidiary that will provide a more predictable contribution to consolidated earnings along with consistent growth and reduced risk.
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