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Hurricane Florence Approaching: Are Utilities Ready for it?


Hurricane Florence, which is now a Category 4 storm, is expected to gain more strength as it is likely to make landfall between northern South Carolina and North Carolina’s Outer Banks on Thursday.

Per The National Hurricane Center, this storm is extremely dangerous and can cause prolonged and heavy rainfall, resulting in flooding. The flooding might bring back memories of Hurricane Matthew floods, which were experienced by the local residents during 2016.

Measures Taken by the Utilities

Every storm has a thing in common, the devastation it causes to our daily life. However, through technological advancements, we now have the ability to correctly predict the intensity of a storm and where it is going to hit. This gives us the chance to prepare well ahead of time.

The utilities operating in the region like Dominion Energy Inc. D and Duke Energy Corporation DUK are already preparing for the storm that could result in widespread outages. These companies are moving their resources to take care of outages and devastation, expected to be caused by Hurricane Florence.

The Electricity Transmission and Distribution lines take a major hit due to the strong winds. Duke Energy has undertaken an initiative to bury nearly 20% of its overhead lines in South Carolina for reducing the impact of the storm in its electricity distribution infrastructure. Dominion Energy has already undertaken initiatives to strengthen its transmission, distribution lines and substations in Virginia.

The aforementioned infrastructure strengthening initiatives will be put to test when Hurricane Florence hits the coast line and further makes inward movement. Both the utilities have informed customers to put together an emergency kit, which should include essential supplies that could be difficult to find after the storm strikes.

Hurricane Season to be Milder

Colorado State University (“CSU”) in its updated outlook for the 2018 Atlantic hurricane predicted a below-normal season with a total of 12 named storms, 5 hurricanes and 1 major hurricane.

The mild storm prediction could be a blessing for the utilities. Nevertheless, the utilities are spending regularly to cope up with the wrath of nature. Per a U.S. Energy Information Administration (EIA) report, annual spending on strengthening distribution lines has increased over the last two decades, from $31 billion to $51 billion currently.

To Sum Up

As the old saying goes, “Nature Always has the Last Laugh.” No doubt the old saying is still holding firm, but the ongoing strengthening of utility infrastructure, awareness and precautionary measures undertaken have been able to save precious lives and quickly bring back life to normalcy as soon the storm passes.

Zacks Rank & Price Movement

Dominion Energy and Duke Energy Corporation both currently have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks from the same industry are DTE Energy Company DTE and Ameren Corporation AEE, both having a Zacks Rank #2 (Buy).

DTE Energy and Ameren Corporation’s Zacks Consensus Estimate for 2018 has moved up 6.8% and 5.6%, respectively, in the past 60 days.

All the abovementioned utilities have returned higher than its industry in the past three months.

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