The POTUS has spoken: Climate change is real, it’s dangerous, and we’re going to do stuff to stop it. The president announced his latest climate change policy last week, and big changes are in store for some utilities. Let’s look at how Obama’s latest might affect Exelon Corporation (NYSE:EXC) stock.
Regardless of your (or my, for that matter) opinions on climate change, there are a few facts that unavoidably put utilities at the center of the climate change debate. In 2011, electricity production accounted for 33% of all greenhouse gas emissions, beating out transportation’s 28% and industry’s 20%. Power plants, specifically, are the source of 40% of all domestic greenhouse gas pollution.
To understand where Exelon Corporation (NYSE:EXC) stock falls into the mix, our most important metric is generation sources. Although utilities rely on regulated earnings for portions of their profits, the president’s new policies promise to seek out the sources, making regulated or unregulated earnings alike cheaper or more expensive — depending on the source.
Exelon stock’s electricity
Currently, Exelon Corporation (NYSE:EXC) packs more than its fair share of nuclear. At around 19,000 MW, this utility alone produces around 20% of the nation’s total nuclear-sourced power. But although Exelon Corporation (NYSE:EXC) is undoubtedly the nuclear king, utilities can’t really “dabble” with this power source. Its capital-intensive nature requires significant investment, and Duke Energy Corp (NYSE:DUK) and FirstEnergy Corp. (NYSE:FE) are two companies that have significant stakes.
Duke Energy Corp (NYSE:DUK)’s nuclear capacity clocks in at 8,450 MW, or 17% of its total generation. More recently, however, the utility has been backing off nuclear. In February, it announced plans to retire a Florida plant in need of an expensive repair, and in May the company suspended plans to apply for new nuclear sites in North Carolina.
FirstEnergy Corp. (NYSE:FE) relies on nuclear for 20% of its total generation, churning out 3,990 MW for its smaller-sized company. But unlike Exelon Corporation (NYSE:EXC), FirstEnergy Corp. (NYSE:FE) also has a massive 64% reliance on coal, another energy source scrutinized by environmental analysts. “Clean coal” seems to be in the clear for emissions-reducing technologies, but traditional power plants could require retirement or expensive modernization.
Does Obama agree with nuclear?
With Exelon’s eggs in the nuclear basket, the president’s sentiments on this energy source will make or break Exelon stock. Fortunately for Exelon stock owners, the POTUS gave two thumbs up to nuclear.
Obama cites nuclear as one of the clean energy technologies that will “continue to drive American leadership” and will promote its international use through “support for the safe and secure use of nuclear power.”
The article Will Obama’s Climate Change Policy Kill Exelon Stock? originally appeared on Fool.com and is written by Justin Loiseau.
Fool contributor Justin Loiseau has no position in any stocks mentioned. The Motley Fool recommends Exelon.
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