Legal Troubles at Exelon Weigh on Utilities Stocks
By Alexander Osipovich
Mounting legal troubles at Exelon Corp., the largest operator of nuclear plants in the U.S., are weighing on the utilities sector.
Shares of the Chicago-based electricity company fell 2.5% in midday trading, extending their losses for the month to more than 9%. Earlier in the session, they hit an intraday low of $43.42, a level the stock hadn't touched since last December.
The chief executive of Exelon's utilities unit abruptly retired Tuesday, less than a week after the company said it had received a second grand-jury subpoena from federal prosecutors looking into its lobbying activities in Illinois.
Potential indictments of Exelon lobbyists or executives could derail a bill that would help keep the company's Illinois nuclear power plants in business, analysts at Mizuho said in a report on Wednesday. An Exelon spokesman said he couldn't comment on the subpoenas or the executive's departure beyond what the company had said in regulatory filings.
Exelon's woes have come during a tough month for utilities, which investors generally see as a defensive play.
The utilities sector of the S&P 500 is down 2% since the beginning of October, making it the index's second-worst-performing segment. The S&P 500 has gained 0.6% this month. Utilities stocks outperformed the S&P 500 in September as investors pulled back from riskier assets.
The U.S. nuclear industry has struggled in recent years with competition from cheap natural gas-fired power plants. The Illinois bill, backed by Exelon as well as some clean-energy groups, would allow the company's nuclear plants in the state to collect payments under a program meant to encourage investment in carbon-free generation.