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Exelon's (EXC) ComEd Lowers Rate, Smart Grid Investment Aids

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Exelon Corporation EXC announced that its unit Commonwealth Edison Company (“ComEd”) has received the necessary approval from the authorities to reduce delivery rates for customers. The approval resulted in a $14 million decline in rates. This is ComEd’s fifth decrease in rates in the past 10 years. Courtesy of the rate reduction, the residential customer bill will drop by $1 per month and be lower than the customer bills in 2008.

Smart Grid Investment Aids in Rate Cut

ComEd have been relentlessly working on grid modernization and its smart grid investments are providing record reliability, efficiencies, and savings that are passed on to customers. Smart gird investments like smart switches, smart meters and smart substation allow ComEd to improve resilience of services and cut operating expenses. The benefits of the same are shared with customers amid this unprecedented crisis. Although energy supply charges account for almost half of the monthly residential bill, ComEd does not derive profit on these costs.

In addition to lowering the rates, the smart gird will lead to system improvements and the usage of latest technologies, and can help reduce dependence on fossil fuels as well as lower emissions. Moreover, smart grid can effectively integrate renewable energy sources and help in lowering emissions.

Transition in Electricity Space

A definite transition in the U.S. utility space is evident from more and more operators’ voluntarily announcement of long-term plans to go carbon neutral or substantially lower emissions from the historical levels. The U.S. Energy Information Administration forecasts renewable sources to contribute 20% and 21% to U.S. electricity production in 2020 and 2021, respectively, indicating an increase from 17% in 2019. The share of natural gas will be 39% in 2020, suggesting a rise from 37% in 2019. Utilities like Xcel Energy XEL, Duke Energy Corporation DUK and DTE Energy DTE have taken initiatives to provide emission-free electricity to customers by 2050.

Apart from the usage of clean energy sources to produce electricity, utilities across the United States are investing heavily to strengthen their existing infrastructure for providing 24x7 services to the expanding customer base. The strengthening of infrastructure and introduction of new technologies enable the detection of outages and help in the restoration of power more quickly.

Exelon is aiming to lower emissions from total operations by taking an initiative to electrify the utility vehicles fleet that helps it to serve 10 million customers in various states. The initial plan is to electrify 30% of the 7,200 utility vehicles and then electrify 50% by 2030. The vehicle electrification plan will reduce greenhouse gas emissions. This is equivalent to planting and growing 1 million trees for 10 years.

Zacks Rank and Price Performance

Exelon currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its shares have gained 10% in the past six months compared with the industry’s growth of 5.3%.

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