Southern CaliforniaEdison (“SCE”), a subsidiary of Edison International (EIX), has chosen Quanta Services, Inc. (PWR) for the construction of transmission infrastructure for its Devers – Palo Verde 2 (DPV2) transmission project. Quanta Services is a leading specialized contracting services company that delivers infrastructure solutions for the electric power, natural gas and pipeline, and telecommunication industries.
Quanta Services will be responsible for the construction of a new 153-mile, 500 kilovolt electric transmission line in an existing corridor. The primary construction work of this venture includes the building of a new 111-mile, transmission line between SCE’s Devers substation near Palm Springs and the new Colorado River Substation, near Blythe, California.
Moreover, the project also includes construction of a new 42-mile, 500 kilovolt transmission line between Devers Substation and SCE’s Valley Substation in Menifee, California. Construction work is slated to begin by the end of the fourth quarter of 2011 and line construction activities are estimated to be complete in the third quarter of 2013.
The Devers-Palo Verde No. 2 project will provide interconnection and electrical transmission for a number of solar energy generators that are planned for construction near Blythe, California. Upon completion this project would facilitate the state of California to achieve its demanding renewable energy goals by 2020.
With a strong portfolio of regulated utility assets and well-managed merchant energy operations, Edison International presents a lower risk profile compared to its utility-only peers. However, several factors continue to weigh on Edison International, including a tepid economy, volatile gas prices, imminent expiry of its cheap rail transport contract and the recovery of capital expansion costs. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Recently, Edison International reported third quarter 2011 results. In the reported quarter, the company clocked pro forma earnings of $1.31 per share, above the Zacks Consensus Estimate of $1.27 per share. However, earnings came in below the year-ago quarterly pro forma earnings of $1.46 per share.
California-based Edison International is a utility holding company operating through its principal subsidiaries: Southern California Edison Company, Edison Mission Energy, and Edison Capital.
