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Exelon Corporation’s (EXC - Analyst Report) unit Constellation Energy Resources, LLC has entered into an agreement with Trumbull County of the state of Ohio to provide natural gas to the residential and small business clients at a cheaper rate. This contract comes under the Governmental Energy Aggregation Program of the Public Utilities Commission of Ohio (“PUCO”).
Per the agreement, this program will start from March 2013 and will continue to October 2013. During this period, the residential and small business customers, who are participating in the Trumbull County natural gas program, will pay a fixed rate of $4.46 per thousand cubic feet (“Mcf”) for all natural gas supply consumption. After this 8-month tenure, the natural gas pricing will be ascertained based on the county’s election to secure a fixed-price rate for the service period from October 2013 to February 2015.
In Ohio, the local societies are allowed, by regulations, to unite their citizens together to purchase natural gas and/or electricity as a group and thus increase "buying power" to ask for lowest price for the group's natural gas and/or electricity requirements to the companies. This is called Governmental Aggregation, which was rolled out by the PUCO.
As per the U.S. Energy Information Administration, the state of Ohio’s natural gas price was $12.79 per Mcf in October 2012. Under this program, the company will provide natural gas to its clients almost 190% lower than the market price.
Cheaper natural gas rate may attract higher number of customers in the region. This factor may enable Exelon to add new clients due to customer-switching and subsequently increase the company’s market share while improving its forthcoming financial results.
As a consequence of the Superstorm Sandy, Exelon invested substantial amount to repair its existing facilities and construct new utility delivery systems in Pennsylvania and Maryland. This unexpected expenditure will to some extent impact the company’s future financial performance.
Chicago, Illinois-based Exelon Corporation engages in generation, transmission, distribution and sale of electricity to the residential, commercial, industrial and wholesale customers.
With a market capitalization of $25.41 billion, the company has 19,267 full time employees. Like another utility provider PPL Corporation (PPL - Analyst Report), Exelon Corporation also has a short-term Zacks Rank #3 (Hold).