Integrys Energy Group, Inc.’s (TEG) subsidiary Wisconsin Public Service has filed for an electric and natural gas rate increase with the Public Service Commission of Wisconsin. The new rates will be effective from 2013.
The rate hike is intended to manage increased expenses like fuel costs for electricity generation, electricity transmission charges, impact of general inflation, general maintenance expenses, pipeline-integration maintenance expenses and manufactured gas plant cleaning expenses.
It is a normal practice for the regulated utility companies to recover their invested funds from consumers through rate hikes. Integrys Energy’s previous rate hike was implemented in December 2011, to manage costs related to safety standard improvements in Bond Falls, McClure, Prickett and Victoria dams, and lower volumes in the wholesale market.
Over the last couple of years, Integrys Energy has invested in its pipelines, integrating and cleaning gas plants where required and carrying out necessary maintenance. This is expected to improve the efficiency of these plants, reducing fuel consumption and thereby, costs for the company.
As of now, Wisconsin Public Service has increased its retail electric rates by less than 0.4% per year over last four years, while retail gas rates have declined. If approved by the Commission, the new electricity rates will result in a monthly hike of approximately $7.00 for an average residential electric consumer using 600 kilowatt-hours of electricity per month. Natural gas rates will jump approximately $2.50 for a normal residential customer with an annual usage of 740 therms.
Utility providers invest frequently on infrastructural development, implementation of new technologies related to electricity generation, transmission and distribution and for meeting fuel expenses in electricity generation. All these ensure uninterrupted, smooth and hassle-free power supply to the end consumer.
We view Integrys Energy as a well managed and high-quality energy provider in high-growth areas. We expect the company’s earnings growth to come from its high quality electric services, continued investments in infrastructure, increasing pipeline-integration investments, and strong customer service. But, at the same time, we recognize the volatility in energy prices and its probable hazards, including the chances of customers switching toward alternate energy sources.
Integrys Energy Group, Inc. currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.
Based in Chicago, Illinois, Integrys Energy Group, Inc. is a diversified holding company providing products and services in both regulated and non-regulated energy markets, through its subsidiaries. Integrys Energy Group, Inc. competes with CMS Energy Corporation (CMS).
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INTEGRYS ENERGY (TEG): Free Stock Analysis Report
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