America's Utilities: More Change Over the Next 10 Years Than the Last 100

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Electricity is becoming one of those kitchen-table issues families can’t ignore.

From Kentucky to Washington D.C., power bills are projected to surge anywhere from 11.8% to 22.1% this year.

And that’s not just a “blip” for 2025 …  

Thanks to the one-two punch of aging infrastructure and soaring artificial intelligence (AI) demand, reliable and affordable electricity will be a goal we’re frantically chasing for years to come.

Calvin Butler is the CEO of Exelon Corp. $EXC ( ▲ 0.75% ), which manages the electricity supply for more than 10 million customers. If you’re in the Maryland or Pennsylvania area, you may be familiar with two of its regional utility companies: BGE and PECO.

In a recent New York Times interview, Butler was asked if today’s landscape reminded him of any others in his career. “No,” he replied. “The energy industry will go through more change in the next 10 years than it has the last 100.”

The CEO is right. The evolving nature of power needs means electricity providers must evolve as well. That’s because utilities are shifting from the simple, old “pay the electric bill” commodity into an era where there is a strategic imperative.

Electricity is the foundation for everything from national security to next-generation computing. And this electricity issue sits at the intersection of two of Chief Stock Picker Bill Patalon’s storylines: The New Cold War and the AI Era.

Within the electricity issue, there are investable opportunities, because if you follow the right storylines, you’ll find the best stocks.

Before the end of the year, we’ll be back with a more detailed look at a few opportunities in this sector.

For today, we’ll circle back to Exelon for you to start your own investing research.

If you’re one of Exelon’s 10 million customers, why not earn back a portion of what you spend on electricity? The company pays a dividend every quarter, currently offering a respectable 3.45% annual yield.

In addition to the dividend, we can do a quick look at Forward P/E.

Forward P/E is a useful (though imperfect) valuation metric because it looks ahead at projected earnings rather than backward at past performance. For the next 12 months, the company’s forward P/E is 16.37, meaning investors are paying about $16.37 for every $1 of expected earnings.

As quick comparisons, electric utility sector rival American Electric Power Company Inc. $AEP ( ▼ 0.05% ) has a forward P/E of 19.68, and the S&P 500 Utility Sector has a forward P/E of 19.16.

While a lower P/E can signal slower growth expectations, it can also indicate relative value, suggesting Exelon may offer a more attractive entry point for investors seeking stability and income without paying a sector premium.

But there’s an important takeaway here, too: This valuation disparity shows that even the utility sector has turned into a “stock picker’s market” for investors.

We’ll be circling back to the electricity market in the weeks ahead, but just wanted to offer this quick overview today.

Take care,

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