FirstEnergy Secures Solar Credits – Analyst Blog

FirstEnergy Corp. (FE) said that its subsidiary Pennsylvania Power Company (Penn Power) has entered into a deal for 19,800 Solar Renewable Energy Credits (SRECs), for a nine-year term, at an average cost of $199.09 per SREC.

The procurement forms a part of Penn Power’s SREC purchase plan aiming to meet the state’s Alternative Energy Portfolio Standards through 2020. Purchasing SRECs will help provide a stable basis for financing solar generation projects in Penn Power’s service area and help support the development of solar energy in the state.

One SREC represents the solar renewable energy attributes of one megawatt-hour of generation from a solar generating facility. Penn Power’s current SREC purchase is equivalent to roughly 2,200 megawatt-hours of annual solar power generation over the next nine years. This equals sufficient energy to power more than 300 homes. 

Penn Power expects the SREC deliveries to begin in June 2011 and last through May 2020. The results of the procurement were approved by the Pennsylvania Public Utility Commission on March 11, 2011. Costs incurred to meet the solar requirements of Pennsylvania’s Alternative Energy Portfolio Standards will be reflected in Penn Power customer bills beginning in June 2011. Penn Power serves approximately 160,000 customers in six Pennsylvania counties.

Headquartered in Akron, Ohio, FirstEnergy Corp. is a diversified electric utility holding company consisting of 10 regulated electric distribution companies serving 6.1 million customers from Ohio to New Jersey. Operating across seven states the company’s net annual revenue is estimated to total about $16 billion with profits nearing $1.4 billion.

FirstEnergy currently has a short term Zacks #3 Rank (Hold). The company is presently at par with its peers, American Electric Power Co. Inc. (AEP) and Dominion Resources Inc. (D), based on the short term Zacks Rank. We persist with our long-term ‘Neutral’ recommendation for the stock.