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Sept. 3-7: NextEra units enter M&A deal; Kinder Morgan could offload more assets

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Sept. 3-7: NextEra units enter M&A deal; Kinder Morgan could offload more assets

A look back at successes and setbacks in the energy industry.

Highs

NEXTERA ENERGY PARTNERS — NextEra Energy Partners on Sept. 5 announced that it agreed to acquire a 1,388-MW portfolio of wind and solar projects from NextEra Energy Resources LLC. NextEra Energy Partners, or NEP, is a yieldco formed by NextEra Energy Inc., which also is the parent of NextEra Energy Resources. The $1.28 billion cash purchase is expected to replace the Canadian portfolio of renewable projects that NEP divested earlier in the summer. NextEra Executive Vice President of Finance and CFO John Ketchum on Sept. 5 told investors and analysts that NEP is eyeing both organic opportunities and third-party M&A to support its growth plans.

KINDER MORGAN — Kinder Morgan Inc. management said the company is considering the sale of its remaining Canadian assets to complete its exit after unloading the Trans Mountain pipeline system to the federal government. Kinder Morgan Canada Ltd. is a small midstream company with "attractive assets and with no debt on the balance sheet," Kinder Morgan CEO Steve Kean told investors and analysts Sept. 5 at the Barclays CEO Energy-Power Conference in New York. "There are plenty of midstream players, including people with complementary positions to ours, who we think will be interested," Kean said. Kinder Morgan sold its largest Canadian asset, the Trans Mountain pipeline system, for C$4.5 billion to the Canadian government in August.

Between

WILDFIRE RISK — California lawmakers passed legislation designed to limit the wildfire liabilities of the state's investor-owned utilities by requiring state regulators to use a financial stress test when determining cost allocations, while ensuring utilities can continue to provide adequate service. The measure, however, did not repeal or change California's policy of "inverse condemnation," which means utilities and their shareholders could still be on the hook for damages from fires that are traced to their electrical equipment. In response, Moody's on Sept. 6 downgraded the ratings on San Diego Gas & Electric Co., PG&E Corp. and its subsidiary Pacific Gas and Electric Co., and Edison International and its subsidiary Southern California Edison Co. S&P Global Ratings on Sept. 5 also downgraded the issuer credit rating of Sempra Energy subsidiary San Diego Gas & Electric over wildfire liability risks.

TROPICAL STORM GORDON — About 10% of crude production in the Gulf of Mexico was sidelined by Tropical Storm Gordon, but the energy industry appeared to avoid major damage or setbacks from the weather event. "Overall, this could have been much worse," Alabama Power Co. spokesman Michael Sznajderman said in an email. Alabama Power and fellow Southern Co. subsidiary Mississippi Power Co. reported about 34,000 outages, which were viewed as typical for a severe storm. Entergy Corp. subsidiary Entergy Mississippi Inc. experienced a peak of 825 outages. "Any time we can make it through a tropical storm with as few outages as we've had so far, we consider it a win for the company and our customers," Entergy Mississippi spokeswoman Mara Hartmann said.

Lows

COAL AGENCY PICK WITHDRAWS — President Donald Trump's pick to lead the U.S. Office of Surface Mining Reclamation and Enforcement said Sept. 6 that he has withdrawn from consideration due to uncertainty around his confirmation, the conditions of an ethics agreement, unknown financial implications and other factors. J. Steven Gardner, president and CEO of engineering consulting firm ECSI LLC, was tabbed in October 2017 to lead the government agency responsible for protecting the public from the adverse effects of surface coal mining operations. "I feel I could have been of service and made a difference for the country, state governments served by OSM and the industry that is still so vital to the country," Gardner said in an email.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.