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Duke Energy Corp (DUK), Edison International (EIX): Top Utility Companies Will Survive EPA’s Regulatory Agenda

Can top utility companies survive new EPA standards?

The challenge facing top utility companies is whether they will be able to adapt to these standards by further developing enhanced technologies that allow for cleaning burning coal. They will also need to convert to natural gas and alternative resources to fire up their plants. The EPA mandates will require utility companies to finance the transitions. These costs will ultimately be passed on to consumers, provided the regulators approve inevitable rate hikes.

The new mandates will affect leaders like Duke Energy Corp (NYSE:DUK), Edison International (NYSE:EIX) and The Southern Co (NYSE:SO).

Duke Energy along with its subsidiaries operates in the United States and Latin America. The company is comprised of three segments: U.S. Franchised Electric and Gas, Commercial Power, and International Energy. The US segment has a market cap of $49.01 billion. The company has a P/E ratio of 16.1, and shares are up by almost 10% this year.

Analysts also note that the company is solid in a number of ways including its healthy revenue growth, increase in net income, reasonable debt levels, and increase in its share during the past year.

Edison International is another of the top ten utility companies and its stock has been a solid performer in 2013. In fact Edison hit a new 52-week high this week and average volume has been 2.4 million shares over the past 30 days. The company has a market cap of $16.35 billion and shares are up about 12.2% year to date.

Southern Company has already starting taking steps to meet the new standards. One of its subsidiaries, Georgia Power, recently announced it intends to seek approval from Georgia regulators to retire 15 coal, oil, and natural gas-fired power plants due primarily to the high cost of meeting stricter federal environmental regulations.

But closing these plants will be less costly than opening new ones given the currently low natural gas prices brought on by a boom in reserves that can be tapped because of improved technologies.

In the final analysis, despite the pending standards the utilities sector should continue to perform well in 2013 according to a consensus of some analysts. But beyond that the future is uncertain.

The article Top Utility Companies Will Survive EPA’s Regulatory Agenda originally appeared on

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