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Utilities in Focus as They Prepare for Active Hurricane Season

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The National Oceanic and Atmospheric Administration’s (“NOAA”) climate prediction center is predicting another above-normal Atlantic hurricane season in 2021. The Atlantic hurricane season officially runs from Jun 1 through Nov 30 each year. Per NOAA, in 2021, there is a 60% chance of an above-normal season, 30% chance of a near-normal season and 10% chance of a below-normal season. Climate changes across the globe have made the Atlantic hurricane season a yearly affair.

Hurricanes and extreme climatic conditions bring devastation. Human habitat and most importantly, utility electric power infrastructure that includes transmission lines, distribution lines, generation plants and sub-stations are adversely impacted by the same. We all require 24x7 supply of electricity to smoothly continue our daily chores but devastation caused by the hurricanes can disrupt uninterrupted power supply.

Response from Utilities

Utilities operating in the United States have been gaining experience from each hurricane season and taking measures to strengthen their infrastructure. Per U.S. Energy Information Administration, annual spending by major U.S. electric utilities on the U.S. electric transmission system increased from $9.1 billion in 2000 to $40 billion in 2019. This spending includes investment in new transmission infrastructure and for operation and maintenance of the existing transmission system. It is quite likely that spending on electric infrastructure will continue to increase to further harden the grid and the entire distribution system.

In addition, utilities in the Zacks Electric Power industry have taken steps in undergrounding miles of transmission and distribution lines to save it from the extreme weather conditions as well as improve the resilience of their systems against storms. Replacement of wooden poles by steel poles, regular vegetation management, advance metering systems and circuits used in distribution have hardened the utility infrastructure.

Courtesy of the advanced technology and proper reporting of the path of storms, utility workers repair the outages as soon the storm passes, thereby significantly reducing the period of power outages compared with historical times. Moreover, since storms are unpredictable utility operators always warn their customers in advance and provide them with directions regarding how to remain safe during the extreme weather conditions.

Utilities Preparing to Fight Back

Even though nature’s fury is unpredictable, utilities like NextEra Energy (NEE - Free Report) , Dominion Energy (D - Free Report) and Entergy Corporation (ETR - Free Report) , among others, have been investing billions of dollars to strengthen their systems as well as provide stable services to millions of customers amid extreme weather conditions. All these stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In addition to the above utilities, Duke Energy Corporation (DUK - Free Report) is also carrying out investments for upgrading its infrastructure to provide reliable services to customers.

Price Performance (three months)

 

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