Dominion Resources (NYSE:D) announced that its subsidiary, Dominion East Ohio, has received approval from The Public Utilities Commission of Ohio (PUCO) to continue the Pipeline Infrastructure Replacement (PIR) program. The approval will also allow the company to recover associated costs over another five-year period through 2021.
The PIR Program
Dominion launched its $4 billion 25-year PIR program in mid 2008. The objective of the program was to replace the pipelines installed in the early 1900s. Under this program, the company planned to replace 5,500 miles in a bid to improve reliability and quality of services offered to customers.
PUCO’s Nod for Higher Spending
The PUCO approval included an authorization to increase spending from the current levels. The regulatory body approved an increase in annual PIR spending from the current $160 million to $180 million in 2017, $200 million in 2018 and up 3% every year thereafter.
Dominion East Ohio is also allowed to recover the expenses incurred for the program through the PIR Cost Recovery Charge.
New Charges for Customers
At present, the monthly PIR Cost Recovery Charge paid by each customer is $8.12. Per the latest PUCO decision, in 2018, Dominion East Ohio can increase the monthly charge by $1.75, followed by another $1.82 in 2019. At present, Dominion can raise its monthly charge for the program by up to $1.40 each year.
Our View
We believe that the commission’s approval is crucial for safeguarding the interests of the company’s 1 million-plus customers as it will enable Dominion East Ohio to provide safe, reliable and uninterrupted services.
Zacks Rank & Key Picks
Dominion Resources carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Spark Energy, Inc. (NASDAQ:SPKE) , DTE Energy Co. (NYSE:DTE) and ITC Holdings Corp. (NYSE:ITC) . While Spark Energy sports a Zacks Rank #1 (Strong Buy), both DTE Energy and ITC Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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