(Recasts to note share-price rally; adds analyst comment.)
DOW JONES NEWSWIRES
Echelon Corp. (ELON) on Monday said it sealed a pact to supply
its meter system to Duke Energy Corp.'s (DUK) "smart-grid" program,
sending its shares up as much as 44%.
Duke has already received regulatory approval to roll out
smart-grid infrastructure in Ohio, including about 700,000 smart
meters, and plans to start a similar program in Indiana. If Duke
fully deploys Echelon's Networked Energy Services, or NES, system
in the two states, the deal could total $150 million for San
Jose-based Echelon. The initial order is for $15.8 million, with
deliveries expected to start at the end of the quarter.
Duke smart-grid executive Todd Arnold said Echelon's metering
infrastructure will enable the company to achieve its plan of an
open, interoperable network that supports not only the initial
functions but also allows for additional devices to be added to the
network in the future.
Echelon's NES system provides electronic power meters accessed
via a Web-based network operating system. It provides information
about the status, operation and health of the grid that Echelon
said allows companies to cut operating costs and boost service
quality.
The pact with Duke "provides notable validation to the product's
use of powerline technologies as well as strong opportunities for
solid revenue streams in the next few years," Needham & Co.
analyst Sean K.F. Hannan wrote in a note to clients.
After rising as high as $11.98 earlier in the session, shares of
Echelon were recently up $2.27, or 27%, at $10.57. Duke Energy
shares were down 22 cents, or 1.4%, at $15.45.
Smart-grid projects boost utility profits because the companies
make a return on their investments in the electric system.
Utilities have been vying for $3.4 billion in federal funding for
the upgrade of meters and other components of the nation's
power-delivery system. The billions of dollars are aimed at
speeding the installation of so-called smart-grid technologies,
moving them from test projects to widespread installation.
The grant program, which was part of the economic-recovery
package passed in February, could provide a boost to utilities at a
time when new spending faces resistance from regulators concerned
about cash-strapped consumers.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com
(Mark Peters and Mark Long contributed to this report.)
