PPL Electric Utilities Corporation, a subsidiary of PPL Corporation (PPL), has embarked on a capital investment plan of more than $450 million for 2011, which stands nearly 7% above last year’s funding and about 35% more than 2009.
PPL Electric Utilities’ 2011 capital budget is mainly targeted towards rebuilding and modernizing of its transmission and distribution system. The company aims to become more reliable, strengthen its aging infrastructure, and upgrade system facilities across its Pennsylvania territory to cater to the increased demand. The company said investments in the year will also include facilities that will serve new customers and technology upgrades to support improved electric operations and customer service.
This ramp-up in capital investments is part of PPL’s strong commitment to providing reliable service, meeting the needs and expectations of our customers, and supporting the region’s economic development.
PPL Electric Utilities has moved ahead with the infrastructure improvements plan after an extensive systemwide study that was completed in early 2009 and indicated a need for long-term additional funding for system modernization. The study revealed that a large share of the company’s utility facilities were set up in the 1960s and 1970s, a peak period of suburbanization and rapid introduction of air conditioners and other electric appliances.
PPL Electric Utilities has slated a major part of its 2011 capital program, about $130 million, for transmission, substation and distribution projects that will provide additional distribution capacity to meet increased electric usage in certain areas across the service area. The company pointed out that these funds will be used in about three dozen transmission and substation projects and 60 distribution system improvements to benefit local customers.
Of these projects, the largest is the new Copperstone transmission substation in central Dauphin County, a two-year, $18.5 million project.
The next large chunk of the capital budget is allotted for the company’s modernization program, absorbing about $80 million.
PPL Electric Utilities’ modernization programs will include replacement of five transmission lines on the company’s transmission system over the next four years; proactive replacement of 400 transmission poles and towers; replacement of 100 older bulk power circuit breakers, and transformers and other critical components at substations; and reinforcement of underground manholes, vaults, utility poles, cable and other distribution equipment across the system.
Additionally, the company said it has set aside about $60 million for facilities, such as extending distribution lines or installing new circuits to serve new residential, commercial and industrial customers; $29 million for company facilities, including a new operations and data center to be built in the Lehigh Valley; and $23 million for technology upgrades.
PPL Electric Utilities provides electric delivery services to about 1.4 million customers in Pennsylvania and has consistently been one of the best customer service companies in the United States.
Allentown, Pennsylvania-based PPL Corporation is a diversified utility company, primarily generating and marketing electricity in two key markets − the northeastern and western U.S. The company primarily competes with FirstEnergy Corp. (FE) and Exelon Corp. (EXC).
We maintain our ‘Neutral’ recommendation on PPL shares. PPL Corp. currently has a short term Zacks #3 Rank (Hold).
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