July 13, 2024


General Line

NextEra Energy Aims to Build a National Water Utility Business


Very last 7 days, Florida-based mostly electric powered utility and renewable electricity giant NextEra Electrical power (NEE -.17%) declared that it had entered into an agreement to buy the wastewater system of a suburban Philadelphia town.

Yep, that’s ideal, NextEra — which owns the country’s largest regulated electric utility, Florida Electrical power and Light — is now a player in the U.S. regulated drinking water and wastewater utility business.

Here is what buyers ought to know.

Water droplets falling into body of water and causing ripples.

Image supply: Getty Images.

NextEra’s suburban Philadelphia wastewater system acquisition

NextEra Energy’s rather new NextEra Drinking water subsidiary is getting the wastewater method owned by Towamencin Township in Montgomery County, Pennsylvania. This technique serves about 7,500 buyer accounts.

NextEra Drinking water expects this acquisition — which is its second, as we will get to in a minute — to shut in the next half of 2023, assuming timely regulatory approval from the Pennsylvania Public Utility Commission. 

The company clinched the deal as a result of a approach that associated bids from 5 pre-skilled entities, according to public info from Towamencin Township. Two of the bidders have been American H2o Performs (AWK .41%), the most significant publicly traded U.S. water and wastewater utility, and Aqua The usa, which is Important Utilities(WTRG .33%) h2o and wastewater utility small business.

That these two large water utilities have been also bidders isn’t really a surprise. Each have headquarters in the Philadelphia Metro region — American H2o Operates in New Jersey and Important in Pennsylvania — and a big presence in the region. 

NextEra Water has significant countrywide ambitions

“The acquisition of the Towamencin wastewater program furthers our intention of building a countrywide drinking water utility,” NextEra Drinking water president Bruce Hauk explained in the press release.

In Oct, on NextEra Energy’s Q3 2021 earnings connect with, its administration team mentioned the company’s entrance into the water utility space and its broad aims for this business. It shared that during the quarter the company had agreed to buy a number of drinking water and wastewater systems in eight counties in the Houston region of Texas. It expects this offer with seller Quadvest, L.P. to near in the third quarter of this 12 months.

On that earnings connect with, then-CFO Rebecca Kujawa (who now prospects the company’s renewable vitality small business, NextEra Power Methods) also shared that the company is constructing “an impressive water reuse and reclamation undertaking that would enable our consumer achieve important financial savings on its drinking water supply demands and make its functions a lot more efficient and sustainable when at the exact time, delivering eye-catching returns to Electrical power Methods.”

NextEra Strength traders should be happy

NextEra Power inventory was previously quite eye-catching, as it really is handily outperformed the marketplace about the lengthy phrase and has enhanced its dividend (currently yielding about 2.3%) for 28 consecutive years. In fact, together with American H2o Performs, it is really just one of the two best dividend stocks to buy now and keep permanently, in my view.

NextEra’s entrance into the water utility house will make its inventory even extra pleasing as an expenditure. This move gives the corporation with substantial development probable, as the U.S. h2o and wastewater utility sector is remarkably fragmented. NextEra’s sizeable money resources give its NextEra Water subsidiary the possible to be a formidable participant.


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