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Utilities Gear Up as Hurricane Sally Nears U.S. Gulf Coast

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As Hurricane Sally, now a Category 2 storm, heads toward the north Gulf Coast of the United States, the National Hurricane Center has warned almost 10 million Americans to take cover from the “life-threatening” and “historic flooding” it is expected to unleash. The storm, which is yet to make landfall, has already flooded parts of Alabama and is expected to produce as much as 30 inches of rain between southern Mississippi and the Florida Panhandle.

Apart from the flooding, the National Hurricane Center has predicted an “extremely dangerous and life-threatening storm surge” in coastal areas, accompanied by wind gusts of 100 miles per hour (mph), up from the prior estimate of 85 mph.

How Hurricanes Affect Utilities?

In times of natural calamities like hurricanes, the Utility sector tends to suffer. The rampage caused by heavy winds and catastrophic flooding affects transmission lines, forcing thousands to deal with power cuts. Notably, catastrophic storms like Sally accompanied by wind gusts snap and topple electricity poles, wires and nearby trees.

Consequently, Utilities’ operations come to a halt while the resultant damages push up restoration costs. Such catastrophic storms also tend to damage natural gas pipelines.

Hurricane Sally’s Impact

As heavy rain and wind gusts from Hurricane Sally have started ravaging the coastal areas, more than 230,000 utility customers in the states of Alabama, Louisiana and Florida suffered power cut in the early hours of Sep 16, per data by the PowerOutage.us.

While utility providers in Sally’s expected pathway must have kept technicians in reserve for the restoration work, the infrastructural devastation that such catastrophic storms leave behind slows down the process. Moreover, heavy flooding also makes it difficult for technicians to commute to places and there remains a risk of executing restoration work amid water logging.

Utilities in Focus

We have handpicked a few Utility players that have operations in Hurricane Sally’s expected pathway and are thus expected to bear the brunt of the storm. In fact, a few of these utilities have announced their emergency infrastructure strengthening initiatives. These utilities carry a Zacks Rank #3 (Hold), which makes them worthy of retention in investors’ portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Duke Energy (DUK - Free Report) : Per media reports, Duke Energy is lowering lake levels across the Nantahala, Catawba, Yadkin and Keowee-Toxaway river basins “by aggressively moving water through these river systems. The utility provider took this step after National Weather Service meteorologists announced that Hurricane Sally could cause up to 10 inches of rain in south Charlotte, potentially flooding low-lying areas of Mecklenburg and surrounding counties.

Entergy Corp (ETR - Free Report) : Expecting high winds, heavy rains along with coastal flooding from Hurricane Sally, in portions of Southeast Louisiana, crews from Entergy’s Louisiana and New Orleans subsidiaries are on alert and prepared to respond. Notably, part of its crew is already working to rebuild the portions of the electric system in southwest Louisiana, as a result of Hurricane Laura.

NextEra Energy (NEE - Free Report) : More than thousands of NextEra Energy’s subsidiary, Florida Power & Light’s customers in south Florida are left without power by Hurricane Sally. The company’s technicians are trying to restore power as early as possible.

Southern Company (SO - Free Report) : Southern Company system personnel are preparing to safely respond to Hurricane Sally as the season’s latest hurricane bears down on the Gulf Coast, prompting state-of-emergency declarations by the governors of Alabama and Mississippi.

American Electric Power (AEP - Free Report) : Southwestern Electric Power Company (SWEPCO), a unit of American Electric, has sent its workers to Florida, to duly respond to damage to transmission lines and poles that Hurricane Sally is expected to cause.

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