NextEra Energy Inc. (NEE:US), the largest U.S. producer of wind power, had its biggest gain in more than four years after saying it may form a “yield company” to attract investors seeking steady returns from its power plants.
The shares rose 4.5 percent to $88.56 at 2:35 p.m. in New York, after earlier climbing as much as 5.9 percent, the biggest intraday increase since April 28, 2009.
NextEra is considering putting as much as 2,000 megawatts of power plants into a so-called yieldco, which would deliver dividends from long-term electricity supply contracts, Chief Financial Officer Moray Dewhurst said during a conference call with investors today. The Juno Beach, Florida-based company may keep the new entity private or have it trade publicly, he said.
“This speaks to an investor base that is looking for a relatively stable yield on assets with long-term power purchase agreements,” Andy Bischof, a Chicago-based analyst for Morningstar Inc. (MORN:US), said in a phone interview. A yieldco can allow for investors to get more value out of power plants that have already been financed and developed, Bischof said.
The yieldco would consist of wind and solar plants along with some fossil-fueled units, Dewhurst said. An additional 1,200 megawatts under development might be sold to the yieldco by 2017, he said.
Earlier this year, NRG Energy Inc. (NRG:US), the largest U.S. independent power producer, created NRG Yield Inc. (NYLD:US) for its contracted renewable and conventional power plants. NRG Yield has risen 59 percent to $34.95 since its initial public offering on July 16.
“The positive investor reception that the NRG Yield structure has received so far has led to a perception that a comparable reception could come about with NextEra doing a similar structure,” Paul Patterson, a New York-based analyst for Glenrock Associates LLC, said by phone.
NextEra today reported third-quarter earnings of $1.43 a share, excluding one-time items, beating by 3 cents the average of 16 analysts’ estimates compiled by Bloomberg.
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