Sempra Energy (SRE), through its subsidiary Sempra Generation will procure solar panels from Suntech Power Holdings Co. Ltd. (STP). The panels would be utilized for a solar power plant being built in Maricopa County of Phoenix, Arizona.
The 150-megawatt photovoltaic power plant is titled the Mesquite Solar I project. The project is part of a larger complex that Sempra is planning to build to provide up to 700 MW of solar power. The first phase is slated to start construction in 2011 and is expected to be finished in 2013. The construction is expected to generate about 200 local jobs.
Sempra has already won a deal to sell power produced at the plant to Pacific Gas & Electric Corporation (PCG) over a 20-year contract.
Sempra Generation, a unit of Sempra Energy, operates and maintains a fleet of natural gas-fueled power plants, and is a leading developer of solar and wind facilities that serve U.S. markets.
Sempra Energy is a southern California-based energy services holding company involved in the sale, distribution, storage, and transportation of electricity and natural gas. Sempra Pipelines & Storage is an operating subsidiary of the company’s Sempra Global and parent business unit. It develops and operates natural gas pipelines and storage facilities in Latin America and the United States, and serves about 2.8 million power and gas customers.
Sempra Energy is scheduled to release its fourth quarter and fiscal 2010 results on February 25, 2011. The Zacks Consensus Estimates for fourth quarter, fiscal year 2010 and 2011 are 95 cents per share, $3.65 per share and $4.17 per share, respectively.
Sempra Energy’s diversified basket of businesses insulates its operations to a significant degree from regulatory rate risks, compared to integrated utility peers. We believe that Sempra Energy presents a lower risk profile relative to its peers, supported by stable utility earnings, steady progress at its LNG terminals and Sunrise Powerlink transmission line, ongoing installation of smart meter and renewable power projects in the Pacific Southwest.
However, on account of pending regulatory issues, and execution risk associated with ongoing infrastructure projects, Sempra Energy presently has a short term Zacks #3 Rank (Hold). This supports our long term ‘Neutral’ rating for the stock. However, we advise investors to focus on the company’s Zacks #2 Rank (Buy) peers like Chesapeake Utilities Corporation (CPK).
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