TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.When it comes to alternative energy, few people would figure Florida could outdo California. But the Sunshine State's rate-regulated utility, FPL Group ( FPL), can teach a few lessons. Led by Chief Executive Officer Lewis Hay III, FPL Group is the biggest U.S. producer of wind energy and ranks No. 2 in the world. The Miami-based company operates in 27 states, generating annual revenue of about $15 billion. FPL Group consists of two primary divisions. Florida Power & Light is an electric utility that serves a population of about 9 million Floridians. But its crown jewel is NextEra Energy Resources, which stretches across the country and into Canada. NextEra will thrive amid the clean-energy initiatives that will emerge from the new Congress and the Obama administration. The White House has proposed limiting carbon emissions by reducing the use of fossil fuels through, among other measures, a market-based "carbon cap" on businesses. The utility's commitment to energy conservation dates back three decades. (Hay joined the company in 1999.) Since 1980, FPL Group's energy efficiency and conservation programs have succeeded in avoiding the need for 12 medium-sized power plants, which, according to U.S. Department of Energy data, is the best performance among all utilities in the country. NextEra's 50 wind facilities include 7,500 turbines in 16 states. FPL Group plans to add as much as 10,000 megawatts of wind-generated power by the end of 2012 and, eventually, up to 30,000 megawatts. It now has about 6,400 megawatts. (One megawatt is sufficient to serve the electrical needs of about 700 homes.)
In California's Mojave Desert, NextEra co-owns and operates the world's largest solar site, which includes seven individual solar plants. Altogether, the division generates 310 megawatts of solar power. In addition, it produces 361 megawatts of energy from 83 generating units at 24 hydroelectric projects in Maine. And NextEra boasts one of the largest competitive nuclear energy businesses in the U.S. The electrical-generation unit claims that more than 90% of the 15,500 megawatts it generates is derived from clean and renewable sources such as wind, solar, hydro, natural gas and nuclear energy. NextEra helped FPL Group's adjusted earnings per share increase 10% in 2008, the firm's third consecutive year of double-digit growth. Despite Florida's economic woes resulting from the collapse in homebuilding and less tourism, earnings will climb 10.2% this year and 12.3% in 2010, analysts estimate. While the state routinely attracted an annual 300,000 to 500,000 new residents in recent years, there was an outflow last year and there may be little or no growth through 2010. FPL Group's Florida Power & Light rate-regulated electric utility experienced flat customer growth in 2008, with the percentage of its electric meters that were either inactive or using minimal amounts of electricity at a historic high. With 74 million baby boomers expected to retire over the next two decades, however, customer growth will pick up again. The utility last year broke ground at the first of three planned utility-scale solar-generation facilities in Florida. Of nine domestic electric utility companies with revenue of at least $10 million, only FPL Group gets a grade in the "A" range from TheStreet.com Ratings. Among those, FPL Group and Entergy ( ETR) are the sole "buy"-recommended stocks. Duke Energy ( DUK), Pepco ( POM), Southern Co. ( SO) and American Electric Power ( AEP) are all classified as "hold"-recommended by TheStreet.com Ratings.