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Duke Energy (DUK) Files for Rate Hike After Nine-Year Gap

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Economic & Earnings Data To Watch For

Economic & Earnings Data To Watch For

Duke Energy Corporation’s DUK unit Duke Energy Kentucky filed an application to the Kentucky Public Service Commission — for the hike in its natural gas distribution rates. The company seeks to recover and support its significant investments made in the Northern Kentucky's natural gas distribution system and make the operation more reliable and resilient for customers.

Per the filing, the company has made such a request for the first time in last nine years after investing nearly $200 million in different capital projects. The company awaits an approval to increase its current rates by approximately $10.5 million.

Impact on Customers

Currently, the company is serving nearly 100,000 natural gas customers across seven counties in Northern Kentucky. Residential customers consuming an average of 53 centum cubic-feet (Ccf) of natural gas per month will see a rate increase of $5.78 or 10.2% on their monthly natural gas bills from $56.79 to $62.57. However, the proposed rate raise will vary from customer to customer, depending on the amount of natural gas a customer uses.

However, the natural gas customers will enjoy the benefits of tax saving on account of federal Tax Cuts and Jobs Act of 2017. The company will pass on approximately $5.2 million in annual savings, to its natural gas customers, which will marginally offset the impact of the rate hike.

Rate Hike to Fund Capex Plans

The rate hikes no doubt increase the monthly budgets for customers. However, utility companies need funds to support capital investment to reinforce and replace its existing infrastructure or to swap the aging one with new set-ups. The capex is necessary to keep essential supplies like natural gas services running 24x7 and improve operational efficiency through upgrades of facilities and equipment.

Duke Energy invests heavily in infrastructure and expansion projects. The company boasts a robust five-year capital plan and currently decides to invest about $48.2 billion in its overall growth projects over the 2018-2022 time frame out of which $7.6 billion will be invested on gas utilities and infrastructure.

Price Movement

In the past six months, Duke Energy’s stock has rallied 7.4%, outperforming its industry’s rise of 4.6%.

Zacks Rank & Key Picks

Duke Energy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Some better-ranked stocks from the Zacks Utility – Electric Power Industry are as follows:

NRG Energy, Inc. NRG sports a Zacks Rank #1. The stock has seen the Zacks Consensus Estimate for 2018 earnings per share move 5.6% north over the past 30 days to $4.14.

Algonquin Power & Utilities Corp. AQN has a Zacks Rank #2. The stock has seen the consensus estimate for current-year earnings being revised 3% upward over the past 30 days to 68 cents per share.

IDACorp, Inc. IDA carries a Zacks Rank of 2. The stock has seen the consensus mark for 2018 bottom line per share being raised 1.4% over the past 30 days to $4.28.

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