Constellation Energy Group Inc.’s (CEG) subsidiary, Constellation NewEnergy Inc., has entered into a green electricity purchase agreement with the New York Stock Exchange, a unit of NYSE Euronext Inc. (NYX). NYSE Euronext is a leading global operator of financial markets and provider of innovative trading technologies.
 
As per the agreement, Constellation NewEnergy will supply renewable energy certificates (RECs) to match NYSE’s annual requirement of approximately 28 million kilowatt-hours of electricity. This agreement between Constellation NewEnergy and the New York Stock Exchange was facilitated by Co-eXprise Inc, an energy consulting firm.
 
The RECs purchased by the New York Stock Exchange over the two-year term of the agreement will result in more than 57 million pounds of avoided carbon dioxide emissions due to the displacement of grid electricity generation by renewable energy.
 
Baltimore-based Constellation Energy Group Inc. is a diversified holding company for a group of energy businesses focused on wholesale power marketing and merchant generation. The company also provides regulated electricity and gas services in central Maryland through its subsidiary, Baltimore Gas and Electric Company.
 
Constellation Energy remains diversified among owned generation, contractual generation, regulated distribution and competitive supply. Its diversified fleet of power generating units located across four U.S. states and Canada is a mix of coal, oil, natural gas and renewable sources (including geothermal, solar, hydro-electric and biomass).
 
Diversified generation assets help the company to minimize the impact of volatile commodity prices on its costs.
 
However, we believe that the above positives are already reflected in the current valuation leaving little room for above market gain.
 
Also, the fortunes of the company appear a little bleak in the near-term due to a tepid economy, lower demand for electricity, over-exposure in the merchant power space and low-dividend yield, compared to its peers. Thus, we maintain our near-term Neutral recommendation on the Zacks Rank #3 stock.
Read the full analyst report on “CEG”
Read the full analyst report on “NYX”
Zacks Investment Research