DPL Inc.’s (DPL) utility subsidiary – Dayton Power and Light Co. (DP&L) announced plans to construct a 1.1 MW solar power facility near its Yankee substation in Washington Township, Montgomery County, Ohio. Construction of the project will begin this month and is expected to be operational by Mar 2010. DP&L’s Yankee solar facility will be constructed in partnership with a number of regional companies led by Ameridian Specialty Services Inc. of Cincinnati.
 
When completed, the facility will consist of 9,000 solar panels constructed over 7 acres, and will generate enough electricity to power nearly 150 homes. The project is expected to cost approximately $5 million.
 
Construction of the solar power facility is in line to comply with the state of Ohio’s renewable portfolio standard. By fiscal 2025 utilities in Ohio have to generate 25% of their output from alternative and renewable sources, of which half or 12.5% must be through renewable sources.
 
Dayton, Ohio-based DPL Inc. sells electricity through its principal subsidiary Dayton Power and Light Company.  DPL owns approximately 900MW of natural gas and diesel peaking generation capacity, and 2,800MW of coal-fired generation capacity.  DP&L is an electric utility with more than 500,000 residential, commercial, industrial, and governmental customers in its 6,000 square-mile service area in west-central Ohio.
 
The other subsidiaries of DPL Inc. are DPL Energy, LLC (DPLE) and DPL Energy Resources, Inc. (DPLER). DPLE operates merchant peaking generation facilities and DPLER markets wholesale power generated by the DPL power plants. In fiscal 2009, the company was nominated as one of the 100 most trustworthy companies based on accounting and governance practices by Forbes.
 
On Thursday the shares of DPL fell 2% and closed at $27.85 on the New York Stock Exchange. However consistent performance across its solid base of stable utility operations, higher rates, regulatory approval for recovery of fuel cost, strong balance sheet, an above industry average dividend yield and a relatively cheap earnings-based valuation support our bullish outlook for DPL. Thus we reiterate our market Outperform recommendation on the stock, which reflects our view that the shares will trade at a premium with its peer companies like PNM Resources Inc. (PNM) and Avista Corp. (AVA).
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