Northeast Utilities, New England’s largest utility owner, fell the most in two months after declining electricity sales raised concerns about the company’s growth potential.
Northeast Utilities declined 1.7 percent to $39.88 at the close in New York, the biggest drop since May 30.
The power company, which is based in Springfield, Massachusetts, and run from Hartford, Connecticut, may face limited long-term gains following its April 4 purchase of Boston-based Nstar for $5.03 billion, Andrew Weisel, a New York City-based utilities analyst with Macquarie Capital USA Inc., said in a research note today.
Northeast Utilities said electricity sales contracted 1 percent during the first half when adjusted for warmer than average weather. Its power sales have declined 1.7 percent on average for four years, Weisel said, and are expected to remain unchanged going forward.
Northeast’s “weather-normalized growth seems to be continuing its downward trend, which could have substantial implications for the future of wholesale power markets in the region,” Paul Patterson, a New York City-based analyst with Glenrock Associates LLC, said in an e-mail.
The outlook for the company’s transmission unit also is “increasingly uncertain,” Weisel says, given potential delays to a proposed 180-mile (290-kilometer) transmission line connecting Northeast Utilities customers to power producers in Quebec, Canada.
Northeast Utilities expects to secure right of way for 40 miles of the line in New Hampshire this quarter, so that construction may begin and the line may go into service by the end of 2016, Leon Olivier, the company’s executive vice-president and chief operating officer, said during a quarterly earnings webcast today.
Weisel expects the project to be delayed a year “given push back and problems” in New Hampshire and predicts an “in-service date of late 2017.”
Northeast Utilities today reported second-quarter net income fell to $44.3 million, or 15 cents a share, from $77.3 million, or 44 cents, a year earlier.
Adjusted for one-time merger-related costs, earnings met the 45-cent average of nine analysts’ estimates compiled by Bloomberg.