The US Department of Energy (DOE) could provide a grant up to $76 million, half of the project outlay, under the Smart Grid Investment Grant Program. PEG expects a decision on the grant by the end of this year.

Under the project, Public Service will upgrade 40 of its existing substations and deploy 62 new advanced loop schemes (ALS) to improve electric reliability. The ALS will split electric distribution circuits into sections that will serve smaller number of customers compared to conventional circuits. This will cut down the frequency and duration of power outages in case of a breakdown.

Additionally, integrating ALS with latest fiber-optic communications platform will help the company to easily identify disruptions, restrict the spread of problems and dispatch repair crews to right places in less time. Public Service also plans to install an advanced communications technology that would set the framework for deployment of various smart grid technologies in future.

Public Service closed at $31.30 on Monday, trading at 9.65X trailing 12-month EPS. We continue to maintain our Neutral recommendation on the stock.