Dive Brief:
- NextEra Energy Transmission has entered agreements to purchase the 53-mile underwater transmission cable that helps power San Francisco, as part of its bid to become the country's leading transmission company.
- The NextEra Energy subsidiary will purchase Trans Bay Cable from Steel River Infrastructure Fund North America and its partners for $1 billion, including the assumption of debt.
- NextEra said the deal is consistent with its focus on making rate-regulated and long-term contracted investments. The company expects the acquisition to be immediately accretive to earnings.
Dive Insight:
NextEra Energy is better known as the owner of Florida Power & Light, one of the largest rate-regulated electric utilities in the United States, but the company says its strategy of growing its regulated businesses expands to its competitive transmission subsidiary.
The purchase of Trans Bay Cable "furthers our goal of creating America's leading competitive transmission company and is consistent with our strategy of adding high-quality regulated assets to our portfolio," NextEra Chairman and CEO Jim Robo said in a statement.
The cable is a high-voltage direct current underwater transmission system with utility rates set by the Federal Energy Regulatory Commission (FERC) and revenues **operating costs?** paid by the California ISO. The cable provides approximately 40% of the electric power used in San Francisco and its surrounding areas.
The Trans Bay Cable was developed two decades ago in response to a Bay Area blackout that exposed resiliency issues in the region.
FERC and the California Public Utilities Commission will need to sign off on the deal, which will require either expiration or termination of the waiting period under the Hart-Scott-Rodino Act. NextEra says it believes the deal will close next year.
NextEra Energy Transmission develops and operates transmission assets across North America through regional subsidiaries, and its portfolio includes assets in Texas and New Hampshire. The company has other projects under development in the U.S. and Canada.
NextEra's unregulated generation subsidiary, NextEra Energy Resources, is coming off its most successful renewables origination quarter, adding more than 2 GW of projects to its backlog, including 650 MW of additional wind repowering and 120 MW of battery storage projects.
