KeyBanc Downgrades Northwestern Corp. (NWE) to Hold

KeyBanc downgraded Northwestern Corp. (NYSE: NWE) from Buy to Hold in the wake of an unfavorable initial decision by a U.S. Federal Energy Regulatory Commission (FERC) Administrative Law Judge on NWE's FERC-jurisdictional transmission rates for the Dave Gates Generating Station at Mill Creek (DGGS), a 150 MW natural gas-fired plant costing about $183 million that began commercial service January 1, 2011.

The judge concluded that NWE should allocate 4.4% of DGGS construction costs to wholesale customers subject to FERC jurisdiction as compared to NWE's proposed allocation of 20% of DGGS costs to FERC wholesale customers.

NWE has lowered 2012 earnings guidance to $2.30-$2.40 from $2.35-$2.50 per share, assuming the full FERC adopts the ALJ Initial Decision, due to an estimated $7 million annual revenue decrease, or $0.12 per share, compared to previous estimates. As a result, analysts at KeyBanc reduced their 2012/13 EPS estimates by 10 cents.

For an analyst ratings summary and ratings history on Northwestern Corp. click here. For more ratings news on Northwestern Corp. click here.

Shares of Northwestern Corp. closed at $37.41 yesterday.

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