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Public Service Enterprise to Invest in Energy Strong Phase 2


Public Service Enterprise Group Inc.’s PEG subsidiary, Public Service Electric and Gas Company (“PSE&G”), proposed to the New Jersey Board of Public Utilities (“BPU”) for additional investment of $2.5 billion on Energy Strong Phase 2 project. Operations related to electric and gas improvements, worth $1.5-billion and $1 billion, respectively, are expected to start in March 2019 post BPU’s approval.

Details of Energy Strong Phase 2

PSE&G is planning to implement several infrastructural upgrades over the next five years. Energy Strong Phase 2 will provide stronger poles and wires to combat storms, modernized electric and gas stations, advanced technology to restore power quickly and additional pipe lines for smoother supply of natural gas.

Improved electric and gas systems is likely to improve customer service and reliability. The next phase of Energy Strong will play a vital role to lower weather impacts and frequent power outages.

Bills to Rise

The company expects that the planned investment will modestly increase the monthly utility bill of its electric and natural gas customers. A typical residential electric customer, who uses 750 kilowatt-hours per summer month, will find its electricity bill to increase by $4 per month.

A residential gas heating customer, who uses 165 therms in a winter month will find its gas bill to increase by $5 per month. Even with the expected increase, the utility bills will be lower than what was charged in 2010.

Regular Investment Is Essential

Utility companies require regular capital investments to maintain, upgrade and expand their regulated infrastructure. These investments increase reliability of their services and allow them to withstand the challenges of weather and natural disasters.

Public Service Enterprise Group is also strengthening its existing electric and natural gas systems to provide quality services to their customers in New Jersey.

Price Performance

Public Service Enterprise’s shares have returned 16.3% compared with the industry’s decline of 9.6% in the past year. The outperformance can be attributed to a solid portfolio of regulated and non-regulated utility assets that offer significant long-term growth potential.

Zacks Rank & Key Picks

Public Service Enterprise Group carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the same space are NRG Energy, Inc NRG, TerraForm Power, Inc. TERP and WEC Energy Group, Inc. WEC. While NRG Energy and TerraForm Power sport a Zacks Rank #1 (Strong Buy), WEC Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NRG Energy posted an average positive earnings surprise of 507.93% in the past four quarters. The Zacks Consensus Estimate for 2018 earnings moved up by 10.4% to $3.29 over the past 90 days.

TerraForm Power has an average positive earnings surprise of 114.71% for the past four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 76 cents in the past 60 days.

WEC Energy posted an average positive earnings surprise of 5.07% in the past four quarters. The Zacks Consensus Estimate for 2018 moved up by a penny in the past 90 days.

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