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NiSource (NI) to Revise Rates for Upgrading Infrastructure

NiSource Inc. NI announced that its unit, Columbia Gas of Pennsylvania, Inc., filed a request to the Pennsylvania Public Utility Commission (PA PUC) to increase natural gas rates. Th0e funds, which will be generated from the rate revision, will be utilized in replacing the aging infrastructure and upgrading underground natural gas distribution pipelines to serve customers more efficiently.

The new rates, if approved by the PA PUC, are expected to go into effect from mid-to-late-December 2022. The rate filing seeks an increase in annual revenues by nearly $82.2 million.

Rationale Behind Rate Filing

Regulated utilities like NiSource need rate revisions at periodic intervals to generate much-needed funds to carry on the maintenance of infrastructure and upgrade the same.

Columbia Gas continues to invest millions of dollars in its distribution system and file a rate adjustment request to recoup substantial investments in safety. Since 2007, Columbia Gas has invested more than $2.8 billion to modernize and expand the natural gas distribution system in Pennsylvania. In 2022, Columbia Gas plans to invest $379 million in Pennsylvania, with $275.8 million dedicated for upgrading the aging underground infrastructure.

If the rates are approved without any change, for a residential customer who purchases 70 therms of gas from Columbia Gas, the bill will increase 10.09% from $123.24 to $135.67 per month. The total bill for a small commercial customer purchasing 150 therms of gas will increase 8.64% from $205.73 to $223.51 per month. The total monthly bill for a small industrial customer purchasing 1,316 therms of gas will increase 7.46% from $1,476.21 to $1,586.33 per month. Even with the approval of these revised rates, in 2022, the total average residential customer bill will be 10 % lower than what it was 20 years ago when adjusted for inflation.

Long-Term Investment Plans

NiSource expects to invest $40 billion in the long-term infrastructure modernization program. The planned spending will further enhance the reliability of natural gas and electric operations and aid the company to provide reliable services to customers.

Zacks Rank & Price Performance

NiSource presently has a Zacks Rank #3 (Hold). In the past six months, shares of NI have rallied 24.7%, outperforming the industry’s rise of 5.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Rate Hike Proposal by Utilities

Electric utilities that are also seeking rate hike approval to recoup investments include Xcel Energy XEL, Alliant Energy LNT and Duke Energy DUK.

Xcel Energy submitted a request to increase natural gas rates by $188.6 million over the next three years. This would gradually increase the average residential consumer’s monthly bill by $4.16 in the first year, then an additional $1.83 in 2023 and an added $2.15 in 2024.If approved, this increase would take effect in November.

Xcel Energy’s long-term (three to five years) earnings growth is currently pegged at 6.4%. The Zacks Consensus Estimate for XEL’s 2022 earnings implies year-over-year growth of 7.4%. The company has a four-quarter earnings surprise of2.1%, on average.

Alliant Energy’s electricity rates will rise 6.2 % in 2022 and stay flat in the next year under the plan approved by the Public Service Commission. Gas rates are also expected to rise 8.6% in 2022.

Alliant Energy’s long-term earnings growth is currently pegged at 6.1%. The Zacks Consensus Estimate for LNT’s 2022 earnings implies year-over-year growth of 4.6%. Alliant Energy has a four-quarter earnings surprise of 3.3%, on average.

Duke Energy submitted a request to increase the fuel rate in 2022. If the proposal is approved by the North Carolina Utilities Commission, the average bill for residential customers, commercial customers and industrial customers will increase 6.6%, 9.3% and 9.0%, respectively, by Jan 1, 2023.

Duke Energy’s long-term earnings growth is currently pegged at 6.1%. The Zacks Consensus Estimate for DUK’s 2022 earnings implies year-over-year growth of 4.2%. Duke Energy has a four-quarter earnings surprise of 2%, on average.


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