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Exelon Unit Upgrades Infrastructure to Improve Reliability

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Exelon Corporation (EXC - Free Report) announced that its electric and natural gas subsidiary, PECO, has completed over 1,300 projects that were aimed to boost its natural gas and electricity service.

Note that the company sets aside an annual investment of over $500 million for services like maintenance and up-gradation of the system infrastructure.

About PECO

In the second quarter of 2016, PECO has monitored, inspected, repaired and replaced equipment in a bid to ensure safe and reliable electric and natural gas supply to customers.

PECO has more than 1,700 reclosers and has recently added another 10 to its fleet. A recloser helps the distribution system by discontinuing the flow of electricity on the line and automatically restoring the same in the case of any problem arising due to a lightning strike, automobile accident or collapsing of trees. PECO’s recloser fleet has prevented more than 84,500 power interruptions to date.

The unit has also completed over 100 electric projects, including the seven System 2020 projects. Apart from these, over 40 projects were completed as part of PECO's ongoing system monitoring program.

From April through June, PECO examined more than 3,700 valves as well as 1,070 miles of natural gas main, and replaced nearly 11 miles of gas main with plastic pipes.

Further, over 21 miles of reinforced tree-resistant aerial electric lines have been installed by the unit across its service territories to survive turbulent weather conditions.

Future Plans

PECO plans to invest about $41 million in vegetation management in the proximity of 3,300 miles of aerial electric lines in 2016 as part of its efforts on preventing power outages caused by vegetation.

Further, the unit has declared that it is investing another $274 million over the next five years in the installation of advanced equipment for boosting the weather resistance of the electricity distribution system and reducing the risk of damage caused by storms.

Our View

Such infrastructure upgrades already undertaken by the company will eventually strengthen PECO’s operations. These initiatives enable the company to improve its service and also allow to retain its existing customers and add new ones.

Zacks Rank & Key Picks

Exelon currently has a Zacks Rank #3 (Hold). Some better ranked stocks in the utility space include Avista Corp. (AVA - Free Report) , DTE Energy Company (DTE - Free Report) and Korea Electric Power Corp. (KEP - Free Report) . All the three stocks carry a Zacks Rank#2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Avista has delivered an average positive earnings surprise of 2.3% in the trailing four quarters.

DTE Energy has delivered an average positive earnings surprise of 6.9% in the trailing four quarters.

Korea Electric Power has witnessed a 2.03% and 2.1% improvement in the Zacks Consensus Estimate for 2016 and 2017, respectively, over the last 60 days.

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