Southern California Edison, a subsidiary of Edison International (EIX), intends to install smart electric meters in the San Joaquin Valley. As a part of Edison SmartConnect program, the company will begin installing the meters in late September 2012.
Edison SmartConnect is a $1.6 billion program authorized by the California Public Utilities Commission. Edison SmartConnect meters are digital, safe and mutual communicating devices. The company will replace the traditional mechanical meters resulting in the transition of electric system into a smart grid.
SCE’s smart metering program was designed to help achieve California’s energy policy goals, relating to improved electric system reliability, customer energy efficiency and demand response, and reduced environmental impact. The company expects its sustained energy conservation to reduce greenhouse gas emissions and smog forming pollutants by an estimated 365,000 metric tons per year, which is equivalent of removing 79,000 cars from the road.
Going forward, the program will help California to achieve its goal of generating 33% of electricity from renewable sources by 2020.
These meters will allow the residential and small business customers to benefit from new energy and cost-saving programs and services in the near term. Residential customers will have the option to choose between Edison SmartConnect meter and a traditional electric meter. Customers choosing the traditional electric meter program will pay a $75 onetime setup fee and a $10 recurring monthly charge as required by the California Public Utilities Commission.
The company has been focusing on developing an industry leading smart meter program that includes extensive testing of smart meters and associated systems to ensure their quality and performance. It is working with Corix Utilities Inc. to make most of its installations.
The company had installed its first smart meter in September 2009. The company plans to continue to make further installations this year for a total of approximately 5 million SCE residential and small business customers. It expects to make majority of the installations from October through December 2012.
In May this year, as a part of the Edison SmartConnect program, the company had begun installing smart electric meters in western Los Angeles County and eastern Ventura County.
With its strong portfolio of regulated utility assets and well-managed merchant energy operations, Edison International presents a lower risk profile compared to its utility-only peers. Going forward, key growth drivers of the company are the consistent performance of its stable utility operations, California's supportive regulatory environment, steep growth in the rate base, incremental dividend, and ongoing alternative energy projects, in line with the renewable energy mandate.
However, several factors continue to weigh on the Edison International stock, including a tepid economy, volatile gas prices and the pending regulatory approval for recovery of capital expansion costs. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
The company mainly competes with Consolidated Edison Inc. (ED) and Entergy Corporation (ETR).
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