NextEra Energy, Inc.’s NEE subsidiary Florida Power & Light Company (“FPL”) announced its plans to apply federal tax savings toward the Hurricane Irma restoration cost of $1.3 billion. After recovering the costs, the unit anticipates saving each of its 4.9 million customers an average of approximately $250.
With the execution of the aforementioned plan, the unit intends to exclude customers from paying a surcharge for Hurricane Irma restoration as previously anticipated. Notably, the company had previously announced its intention to recover $1.3 billion in the form of restoration costs from its large customer base of 4.9 million. This it intended to realize by introducing a surcharge on customer bills through 2020.
The unit clearly anticipates realizing the federal tax savings on the back of the Tax Cuts and Jobs Act of 2017, which came into effect on Jan 1, 2018. Going ahead, the federal savings will aid FPL to offset the burden of restoration costs due to the hurricanes. Further, it will save its customers from the restoration expenses.
Customers Poised to Benefit
FPL’s decision to eliminate the previously anticipated surcharge by directing federal tax savings toward consumers is a clear indication of its intention to keep the bill low. Additionally, it has been working relentlessly to provide quality services to customer at best possible prices.
Going back to historical data, FPL's typical 1,000-kWh residential customer bill has remained low. In fact, FPL's typical customer’s bill is much lower than what it was a decade back.
The implementation of the federal tax savings toward a typical FPL's 1,000-kWh customer bill will drop it 30% below the latest national average. This will reduce individual bills by $3.35 a month, effective Mar 1, once the costs of restorations have been recovered. The federal tax benefit will allow customers to enjoy reliable services at a reduced price.
We have witnessed some other utilities in the recent past directing the federal tax savings to reduce the bills of customers. Notably, utilities including the likes of AVANGRID, Inc. AGR, WGL Holdings, Inc. WGL and ONE Gas, Inc. OGS have expressed intention to pass on the tax savings benefits to customers.
Shares of NextEra Energy have gained 29.8% in the last year, outperforming the industry’s rally of 4.9%.
Zacks Rank & Key Pick
NextEra Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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