NextEra Energy Inc. (NEE) said that its energy subsidiary, NextEra Energy Resources, has entered into a power purchase agreement with Google Energy LLC. As per the agreement, NextEra Energy will supply 114 megawatts of wind power from its Story II Wind Energy Center in Iowa.
NextEra Energy will start supplying power to Google Energy from July 30, 2010, at a fixed price for the next twenty years. The lion’s share of the production at Story II center, with a total production capacity of 150 megawatts, will be supplied to Google Energy with the remaining production sold to the city of Ames, Iowa.
NextEra Energy continues on its winning course of securing wind power contracts. In April 2010, the company was awarded 148 megawatts of wind projects in Ontario, Canada, as part of the province’s feed-in tariff program.
NextEra Energy Resources is a producer of renewable energy and is one of the largest competitive energy suppliers in North America. In 2009, by producing green power from its 9,000 wind turbines in operation at 77 wind farms in 17 states of the U.S. and in Canada, the company reduced carbon dioxide emission by 14 million tons.
During the first quarter earnings call, NextEra Energy Inc. reaffirmed its 2010 operating earnings guidance in the range of $4.25 per share to $4.65 per share. The Zacks Consensus Estimates for second quarter 2010, fiscal year 2010 and fiscal year 2011 are $1.06 per share, $4.35 per share and $4.52 per share, respectively.
Based in Juno Beach, Florida, NextEra Energy Inc., through its subsidiaries, engages in the generation, transmission, distribution and sale of electric energy in Florida. The majority of energy produced by the company is derived from renewable sources. The major competitors are Progress Energy Inc. (PGN), Southern Company (SO) and Teco Energy (TE).
The positive catalysts for NextEra Energy are its strong portfolio of assets and leadership position in wind generation in North America. However, we are still concerned about the recovery of Florida’s economy as well as the company’s ability to maintain its current renewable growth rate over the long term.
We believe that although the predetermined price contract will ensure a steady flow of revenues and provide a hedge against economic pitfalls for the next twenty years, the company might miss out if the prices increase. We presently retain a short-term Zacks #2 Rank (Buy) and a longer-term Neutral recommendation on the stock.
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