What to expect from competition
Exelon Corporation (NYSE:EXC) is concentrated more towards nuclear energy, while PPL is concentrating on natural gas and wind energy for its power generation. And with natural gas prices at all time lows, the company has benefited a lot. As the demand for regulated electricity supply is improving, PPL has won several major regulatory contracts in the U.S. and U.K. in the last couple of years that have improved its position.
Further, as the government is encouraging the use of renewable source of energy, PPL is moving more into clean and renewable energy with its hydroelectric expansion project in Montana, which boosted its capacity by 70% of its current renewable energy generation capacity. PPL is, no doubt, going strong, and with its second quarter earnings report coming soon, I expect the analysts estimates of $2.63 billion on revenue and $0.46 EPS will not be difficult to achieve.
Duke Energy is another major player in nuclear energy production in North Carolina, South Carolina, and Florida with 11,350 MW of nuclear capacity. However, the company has a well diversified source of production through coal, oil, natural gas, nuclear and hydroelectric supplies, which have provided it with cushion when nuclear energy has been in a bit of trouble.
As things are moving towards clean sources of energy, Duke Energy has installed a coal gasification plant, which emits 70% less pollutants and 50% less carbon dioxide emission compared to traditional coal-fired plants. Moreover, if natural gas prices increase, then these coal plants will become further price-competitive.
Further, Duke Energy received rate case approval on May 30, from North Carolina Utilities commission, which allows an increase in rates of $178.7 million, or 5.5% increase on average for all customers. Despite the increase in approved rate, its rates will remain below the national average, so we should see the increase as a recovery of investments already made to modernize the system.
Final words
Currently, in terms of dividend or return in the form of appreciation, Duke Energy and PPL seem to be better choices than Exelon Corporation (NYSE:EXC) with their diversified energy production options. Among Duke Energy and PPL, I would rate the former as a better investment with a long term earnings growth rate of 4%-6%.
The article Should Investors Buy This Utility Company? originally appeared on Fool.com and is written by tarun bachhawat.
tarun bachhawat has no position in any stocks mentioned. The Motley Fool recommends Exelon. tarun is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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