U.S. Markets closed

Duke Energy Unit Files for Rate Hike for Customers in Florida

Zacks Equity Research

Duke Energy’s DUK subsidiary, Duke Energy Florida, requested Florida Public Service Commission to increase electricity rates for residential, commercial and industrial customers. If approved, residential customers will have to pay an additional $5.34 per month for using 1,000 kilowatt hour (kWh) electricity. Similarly, commercial and industrial customers’ bills will likely increase 2.6-7.7%.

Reason Behind Rate Hike

The rate hike is expected to assist the regulated company to cover costs incurred for restoration work, following the Category 5 storm, Hurricane Dorian, and a smaller Tropical Storm, Nestor that occurred in October. Notably, Nestor was a string of tornadoes, with a speed of 120 miles per hour, which uprooted trees, overturned vehicles and ripped off roofs.

The estimated restoration costs for Hurricane Dorian are $171 million and that for Nestor is $400,000.

Company’s Initiative

Duke Energy is focused on improving existing infrastructure and enhancing grid reliability. With an aim to make its assets stronger to reduce outages due to natural calamities, it is willing to invest $28.5 billion for electric utilities and infrastructure, $5.9 billion for gas utilities and infrastructure, and $2.6 billion for commercial renewables between 2019 and 2023.

The company is also expanding its renewable asset base. With respect to its commercial renewables business, it continued to expand its wind and solar portfolio in 2018, with capacity nearing 2,900 megawatts (MW) across 14 states, comprising 21 wind and 64 solar facilities.

Duke Energy Florida is adding more solar power to its portfolio along with modernizing grids to provide cleaner energy. The rate review, if approved, will enable the company to strengthen its electric grids to face frequent climatic calamities.

Utilities Spending for Infrastructure Strengthening

Other Utilities are also making investments to strengthen their infrastructures. FirstEnergy Corporation FE, under its “Energizing the Future”, plans to invest $4.8 billion in capital between 2018 and 2021 in its Regulated Transmission operation and also targets to invest $6.2-$6.7 billion during the same period to strengthen its distribution network.

NextEra Energy, Inc NEE is planning to invest $36.6 billion in different projects between 2019 and 2023 to modernize and strengthen its infrastructure.

Dominion Energy Inc’s D long-term capital spending plan of $26 billion for the expansion of electric transmission and distribution, and the addition of renewable assets, natural gas facilities and midstream assets bodes well.

Price Movement

Duke Energy gained 2.6% in the last 12 months compared with the broader industry’s growth of 14.8%.

 


Zacks Rank & Key Picks

Duke Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Dominion Energy Inc. (D) : Free Stock Analysis Report
 
FirstEnergy Corporation (FE) : Free Stock Analysis Report
 
Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research