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Tickers in this Article: ELON, ENOC, COMV, BGC, ABB, ITRI, DUK, IBDRY.PK
With the upcoming passage of the $800 plus billion dollar stimulus package our aging electrical infrastructure will get a big boost. We certainly do need it. Currently, our nation's energy infrastructure is divided into three separate master grids; the Eastern Interconnection Grid (EIG), the Western Interconnection Grid (WIG) and the Texas Interconnection Grid (TIG). Each of these operates separately and is unable to share resources or power. For example, energy produced by a wind turbine in New Mexico has no way of reaching the crowed streets of New York City, where it is needed. But, that is about to change.

The creation of a smart-grid, or a digital transmission system for energy would allow for such transactions to occur. These demand response actions will also be able to increase the nation's energy efficiency. The Department of Energy stated in a recent report that a 5% improvement in our grid efficiency would be the same as permanently eliminating emissions from around 53 million cars. By using smart meters and an interconnected network, utilities and power will help control energy use and customers will be giving the information to make choices concerning their own power consumption.

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While larger, more experience company's, such as transformer producer ABB Limited (NYSE:ABB), or electrical cable maker General Cable (NYSE:BGC) will get most of the stimulus pie, there are several smaller firms that should get a nice boost from the federal spending spree.

Focusing on Efficiency with Three Picks
Echelon Corporation (Nasdaq:ELON) essentially develops all the necessary network infrastructure products that enable various devices, such as electricity meters, light switches, and thermostats to be connected to the smart grid. The company markets three distinct, yet complementary product lines; its iLon Smart servers, which allows "smart" devices to be connected to the grid and ultimately controlled, Networked Energy Services (NES), which monitors energy use, enables utilities and customers to participate in demand response transactions and its Pyxos FT chips, which when added to devices, such as LED lighting fixtures or vending machines, allow the device to become "smart" and be controlled remotely to save energy.

Echelon has attracted many large utility partners including Duke Energy (NYSE:DUK) and wind power producer Iberdrola (OTC:IBDRY) to begin using their smart meter technology. The company estimates that there are at least 1.5 billion electricity meters worldwide and only a small percentage of them are smart meters, giving them a long-term demand for their products. More recently, the city of Oslo in Norway replaced the ballast in 55,000 street lights with iLon infrastructure and was able reduce energy consumption by 62%

Echelon recently reported 2008 full year earnings and a GAAP net loss of 15 cents a share for the fourth quarter. Full year 2008 revenue was $134 million versus $137.6 for 2007. Shares of the company currently can be had for around $7, down from their 52 week high of $16.56.

With its initial public offering (IPO) in April of 2007, Comverge Inc. (Nasdaq:COMV) became the first publicly traded demand response company. The company's applications use smart meters to help balance peak energy load times. Comverge currently has over 4.5 million meter devices installed with over 500 different utility groups. Recently, the company unveiled a new software suite for advanced smart grid applications, including two communications between devices. (These options represent one of the most important political commodities; see Fueling Futures In The Energy Market.)



While, Comverge has not reported full year earnings yet for 2008, it did provide guidance for it during last quarter. The company estimates that full year revenue should be near $80 million and going forward it has future contracted revenues of over $500 million. The company finished the third quarter with $52.7 million in cash.

A direct competitor to Comverge, EnerNOC Inc. (Nasdaq:ENOC) also provides demand response applications. Through its Network Operations Center (NOC), EnerNOC joins up various participating utilities and end users to overcome peak load demand. This can include automatically shutting down HVAC units, dimming street lighting and the starting of back up generators to smooth out the disturbance.

EnerNOC will report earnings on February 18, 2009, but based last quarter's numbers the company reported revenues of $44.2 million compared to $19.1 million the same quarter in 2007. Net loss for the quarter was 16 cents a share. One bright spot, however, in spite of the tight credit markets, the company was able to secure a $35 million credit facility. This certainly is a vote for confidence in EnerNOC's ability for future growth.

Bottom Line
The proposed economic stimulus bill will be a blessing for our nations aging electric infrastructure. The increased spending in the way of energy efficiency will yield long-term results. While there are many large firms that will surely benefit from this spending, there are many smaller companies as well. The proceeding energy efficiency stocks are a great way to play this bill as well as make longer-term investments.

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