Exelon (EXC) Unit to Reduce Electricity Distribution Rate - Analyst Blog

Commonwealth Edison Company ("ComEd"), a unit of Exelon CorporationEXC , filed its annual delivery service formula rate request for the distribution of electricity to the Illinois Commerce Commission ("ICC"). If approved by the concerned authority, residential consumers will be getting electricity at lower remunerations applicable Jan 2016.

Per the appeal, the average monthly electric bill for residential customers will decrease by $1 from the previous level. It reflects a year over year decline of around $50 million in 2016.

ComEd's ongoing efforts on cost management, and operational efficiencies backed by systematic smart grid investments primarily led to the filing of the rate reduction appeal.

ComEd's effort to lower residential electricity rates is a step toward attracting more customers and stopping attrition. This will also intensify the competition with its peers.

The latest filing fulfills the annual rate setting process as mandated by the Energy Infrastructure Modernization Act or Smart Grid law. Per the act, utility providers must submit their respective estimates for the current year's capital investments and previous year's actual expenses. Subsequently, the ICC will take eight months to review the proposal and escalate decisions on the rate request.

ComEd has also filed for its annual adjustment in transmission rates with the Federal Energy Regulatory Commission ("FERC").

The Illinois Power Agency ("IPA"), buyer of electricity on behalf of Illinois utilities, has set new energy supply rates, which result in an extra $2 reduction for customers who have opted for services from ComEd, thereby lowering the total bill by approximately $3. The new energy supply rates will be effective from Jun 1, 2016.

ComEd continues to focus on providing reliable services to its customers by investing substantially in utility infrastructures, primarily smart meter installation. It installed 739,000 digital smart meters through 2014-end. In Jun 2014, the ICC approved ComEd's accelerated deployment plan that allows installing over four million smart meters throughout its service territory by 2018.

In 2014, Exelon's capital investments came in at $6.08 billion, up 12.6% year over year. It plans to spend $16 billion in next five years, including $7.2 billion in 2015. Systematic investments in improving electric systems will enable the company to reduce outages and improve operational efficiencies besides saving around $2 billion over 20 years.

Exelon currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include DTE Energy Company DTE , NextEra Energy, Inc. NEE and Public Service Enterprise Group Inc. PEG , each carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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