Avista Corporation (NYSE:AVA) recently received approval for natural gas rate case from the Public Utility Commission of Oregon (PUC). The new gas rates will be effective from Jan 15, 2020.
The bills of residential natural gas customers in Oregon using 47 therms per month on an average will increase 4.5% to $51.13. The approval is going to increase the company’s natural gas revenues by $3.6 million.
Importance of Rate Hike in Utility Space
The companies operating in U.S utilities sector require huge investments in infrastructures on a regular basis to maintain reliable and safe services. The companies spend consistently towards up-gradation and maintenance. Rate hikes enable these companies to recover the invested funds and invest more in the future.
In January 2019, Exelon Corporation (NASDAQ:EXC) received necessary approval from the Maryland Public Service Commission to raise natural gas distribution rates for its customers in the state.
Long-Term Capital Plans
Natural gas, as a primary source of energy, is gaining popularity in the United States on its clean burning property and availability. Per a report from the U.S. Energy Information Administration (EIA), U.S. dry natural gas production will average 91.6 billion cubic feet per day (Bcf/d) in 2019. Production volumes will further increase in 2020 and are expected to average 93.5 Bcf/d. We believe that the company’s natural gas business will gain from these projections.
The company serves 389,000 electric customers and 357,000 natural gas customers. Avista keeps on investing regularly to provide services to these customers efficiently. After spending $196 million in the first half of 2019, it aims to spend $1.65 billion in the 2019-2022 time period.
Other companies are also making long-term investment plans. NextEra Energy (NYSE:NEE) has well-chalked plans to invest nearly $50-$55 billion in different projects over the 2019-2022 period. Duke Energy Corporation (NYSE:DUK) has a robust five-year capital plan and currently intends to invest about $37 billion in its overall growth projects for the 2019-2023 period.
Price Performance
In the past six months, shares of Avista have gained 16.6% compared with the industry’s rise of 8.1%.
Zacks Rank & Key Picks
Currently, Avista has 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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