UBS on Dominion's Decision to Close and Decommission Kewaunee Power Station

The global equity research group at the investment bank UBS just published a research note concerning Dominion's decision to close and decommission the Kewaunee Power Station:

In 2011, Kewaunee had a loss of -$39Mn in net income, which D[ominion] excluded from operating earnings. Following a roll-off of the above market PPA at the end of ’13, we had projected that earnings would fall by another ~$65Mn driving negative FCF and minimal EBITDA. We agree that the economics of Kewaunee were uniquely challenged given its small size and regionally depressed power prices.

That's a conclusion that pretty much reinforces what Dominion had to say earlier today.

Comments

Anonymous said…

When gas prices inevitably go back up, the opposite will be true, and they will have no plant to reap the rewards. Whatever happened to fuel diversity and long-term decision making.

October 22, 2012 at 6:07 PM

Anonymous said…

how does that account for Dominion CEOs taking $10+ million in bonuses?

October 22, 2012 at 6:51 PM

Engineer-Poet said…

Whatever happened to fuel diversity and long-term decision making.

It interfered with getting the next quarterly bonus.

October 22, 2012 at 9:17 PM

Anonymous said…

To the first anonymous-
How are gas prices related to grid prices? Last I checked Kewaunee doesn't burn oil.

October 31, 2012 at 10:40 PM

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