Exelon Corp.'s (EXC - Analyst Report) subsidiary Commonwealth Edison Company (“ComEd”) has started fitting smart meters all over its service area. This initiative is a part of the company’s grid modernization program under the Energy Infrastructure Modernization Act (“EIMA”).
ComEd will install first smart meter at the western suburbs in North Riverside. The company expects to put in 60,000 smart meters by 2013, with total installation of over 4 million smart meters. The company expects to complete this program by 2021.
Smart meter, a digital electric meter and a two-way radio communications provider, is used to collect usage information and convey it to ComEd via a wireless connection. This digital meter enables customers to access more information about energy use through online energy-management tools, which will subsequently help them to deal with their electric bills.
Further, Smart meters will assist ComEd to identify the source of outages and power outages mechanically. It will also help the company to reduce operating costs, thereby resulting in a decline in customers’ electricity bills. Smart meters will help the customers to easily control their energy usage. In addition, this new project will create 2,000 full-time jobs in the future.
As far as customer privacy is concerned, ComEd utilizes modern cryptographic technologies in the smart meter to protect customer data.
We note that EIMA was introduced by Illinois General Assembly. The purpose of this regulation is to make investment for developing and modernizing the state's electric infrastructure, creating job opportunities, enhancing reliability and attracting investment to the state. EIMA also allows the utility providers the right to recover their actual investments in future.
To pursue the EIMA, ComEd has initiated a 10-year grid modernization program, worth $2.6 billion. Per the program, the company will invest $1.3 billion to strengthen electric systems and an additional $1.3 billion will be spent to install new digital smart grid and advanced meter technology.
It is evident from Exelon’s capital spending program that the company currently intends to upgrade its utility assets. In 2013, another subsidiary of the company, PECO Energy Company, intends to invest approximately $440 million to upgrade its existing natural gas and electricity distribution and transmission systems along with the addition of new assets.
As of Jun 30, 2013, Exelon’s cash balance was $1.0 billion and cash provided by operating activities during the first six months of 2013 was $1.2 billion. A strong financial position helps the company to make investments at regular intervals for the infrastructure development activities.
Exelon currently has a Zacks Rank #3 (Hold). However, Huaneng Power International, Inc. (HNP - Snapshot Report) carries a Zacks Rank #1 (Strong Buy). Alliant Energy Corp. (LNT - Analyst Report) and IdaCorp, Inc. (IDA - Analyst Report) , each with a Zacks Rank #2 (Buy) are also worth considering.
Chicago, Ill-based Exelon engages in generation, transmission, distribution and sale of electricity to the residential, commercial, industrial and wholesale customers.