Dominion Files for Electric Rate Cut on Lower Fuel Cost - Analyst Blog
Dominion Resources, Inc.’s D operating subsidiary, Dominion Virginia Power has filed a request with Virginia State Corporation Commission (“VSCC”) to reduce monthly electric bills for residential customers in Virginia. The rate cut request emanated from lower fuel costs for the company. The utility requested VSCC to fast track the rate cut to Apr 1 from Jul 1.
As per the request, Dominion’s customers in Virginia could witness a total reduction of 5.5% in their monthly electric bills. This translates to a cutback of $6.12 in the residential bill per month for a customer using 1,000 kilowatt hours (kwh) of power.
Included in the 5.5% rate reduction is an additional 28 cent cut relating to reduced generation construction costs for power stations, energy center and coal plant conversion to biomass. Accounting for everything, the residential bill for Virginia customers will now be around $109.55 per month compared with $115.95 earlier.
These competitive rates, if they come into force, will be 18.8% below the national average of $134.90. Monthly savings for commercial customers could be around 7% and 10% for that of industrial customers.
As cited by the company, a primary factor behind dropping fuel rates is the natural gas-fired power stations that have commenced operations over the last few years. One more is waiting to go online by May 2016.
Recently, Dominion increased its quarterly cash dividend to 64.75 cents per share from 60 cents paid in fourth-quarter 2014. This translates to a yearly dividend of $2.59 per share, an increase of 7.9% from $2.40 disbursed in 2014 (read: Dominion Up on 7.9% Dividend Hike, Rise in Payouts).
Zacks Rank
Richmond, VA-based Dominion Resources currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry are Huaneng Power International, Inc. HNP, Enersis S.A. ENI and Avista Corp. AVA, all sporting a Zacks Rank #1 (Strong Buy).
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