Exelon Corp. (EXC:US) and Entergy Corp. (ETR:US), the two largest U.S. nuclear power operators, rose to their highest in five months as increasing natural gas prices boost wholesale electricity rates.
Exelon, based in Chicago, climbed (EXC:US) 0.8 percent to $36.37 at 12:51 p.m. in New York, the highest price since Nov. 1. New Orleans-based Entergy gained (ETR:US) 1.5 percent to $70.23, the highest since Nov. 2. Both power producers have risen 9 percent in the past month, outpacing the Standard & Poor’s 500 Utilities Index, which has increased 5.7 percent since March 18.
Exelon and Entergy have benefited from “a sharp recovery” in gas, which is helping drive power prices higher in the eastern U.S. where their nuclear plants are concentrated, Travis Miller, director for utilities research at Chicago-based Morningstar Inc., said in a phone interview today.
“We continue to think there’s upside for these eastern power producers, especially the low-cost ones like Exelon and Entergy,” Miller said. The companies will benefit as more coal plants retire because of federal restrictions on mercury and other airborne pollutants that take effect in 2015, he said.
Exelon had no immediate comment on the share gain and Entergy declined to comment.
Entergy today reported preliminary first-quarter earnings that exceeded analysts’ estimates. Higher prices for nuclear energy resulted in per-share profit excluding one-time items of 93 cents a share, beating the 73-cent average of 11 estimates compiled by Bloomberg.
Natural gas futures reached a 20-month high in New York today, making it the largest gainer on the Standard & Poor’s GSCI index of 24 commodities. The price fell to a 10-year low last April.
Spot wholesale power prices at PJM Interconnection’s benchmark western hub have averaged $41.61 a megawatt-hour since Jan. 1, 22 percent more than a year ago, according to data compiled by Bloomberg.
“When gas prices go up, the coal and nuclear guys who’ve gotten crushed over the past year start to make margins again,” Samuel Brothwell, senior utilities analyst with Bloomberg Industries, said in a phone interview.
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