NextEra Energy said Tuesday it has taken a $1.2 billion write-down for its 31% ownership stake in the Mountain Valley natural gas pipeline, which has been plagued with cost overruns and delays from legal opposition and regulatory roadblocks.
The 300-mile pipeline, stretching from West Virginia to Virginia, was originally projected to cost about $3.5 billion and be completed by the end of 2018. Project costs are now approaching $6 billion and the completion date has been pushed back to 2022.
“Obviously, the project has taken longer and cost more than what we anticipated,” NextEra CFO Rebecca Kujawa told financial analysts during the company’s fourth-quarter earnings call.
Mountain Valley’s lead developer, Equitrans Midstream, said it will seek individual stream-crossing permits from the U.S. Army Corps of Engineers after a U.S. appeals court in November issued a stay on comprehensive water permits in a case brought by environmental groups.
Kujawa said the court order, the change in presidential administrations and Democratic control of the Senate all played a role in NextEra’s action.
“The impairment does reflect our view of what we still need to accomplish and the associated fair values related to the chances of being able to successfully execute on that,” she said.
The impairment resulted in a fourth-quarter loss of $5 million for NextEra, almost $1 billion less than $975 million profit ($0.50/share) a year earlier.
The Juno Beach, Fla., company reported 2020 year-end earnings of $4.6 billion ($2.31/share), an improvement from the year before when earnings were $4.1 billion ($2.09/share) and representing year-over-year growth in adjusted earnings per share of about 10.5%.
“NextEra Energy’s performance in 2020 was strong both financially and operationally, and we successfully executed on our initiatives,” CEO Jim Robo said in a statement. “We remain as enthusiastic as ever about NextEra Energy’s long-term growth prospects. … I will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted [EPS] expectations ranges in 2021, 2022 and 2023, while at the same time maintaining our strong credit ratings.”
Robo highlighted NextEra’s continued development of renewable energy, saying the company “is already proof that you can be clean, low-cost and financially successful all at the same time.”
By 2024 NextEra expects to build as much as 30 GW of renewables, which represents about 15% of the nation’s wind and solar power late last year.
Robo also said an offer “remains on the table” for South Carolina state-owned utility Santee Cooper. He said NextEra is “ready to negotiate whenever the state is ready to get going,” and, apparently, interest in the Palmetto State has never been stronger to offload the utility.
NextEra shares sank to $85.02 in after-hours trading, a drop of $2.02 from the previous close.
