Duke Energy Ohio, a regulated utility subsidiary of Duke Energy Corporation (DUK), announced that it has reached a settlement agreement for its application related to an Electric Security Plan (ESP) filed with the Public Utilities Commission of Ohio (PUCO). The ESP was filed with PUCO on June 20, 2011. The agreement, which is subject to approval by the PUCO, covers the company's generation service from January 1, 2012 through May 31, 2015.
This agreement, if approved by the commission, provides Duke Energy Ohio customers the opportunity to take advantage of the current low market rates and allows the company to focus on the long-term competitiveness of its generation assets in Ohio.
Per the estimate of Duke Energy, if the ESP is approved, an average Ohio residential customer, who uses on average 1,000 kWh a month, will see an approximately 11% rate reduction in their bill, or roughly $14 per month, starting January 1, 2012.
Duke Energy Ohio's operations provide electric service to approximately 685,000 customers and natural gas service to approximately 400,000 customers.
Duke Energy Corporation’s U.S. electricity and gas operations generate a relatively stable and growing earnings stream. Looking ahead, our mostly positive outlook for the company is supported by its ongoing merger proceedings with Progress Energy Inc. (PGN), paving the way for the largest U.S. utility. In addition, its strong balance sheet and ongoing capital expansion projects add visibility to the story.
However, valuation continues to be restrained by a number of factors, including the present unfavorable macro backdrop, tepid demand for electricity, foreign currency exchange volatility and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
The company is expected to release third quarter results on November 3, 2011. The Zacks Consensus Estimates for third quarter 2011 and fiscal year 2011 are currently at 47 cents per share and $1.38 per share, respectively.
Charlotte, North Carolina-based Duke Energy is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses which supply, deliver, and process energy for customers in North America and selected international markets.
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