) has received approval from the Idaho Public Utilities
Commission (IPUC) to increase electric and natural gas rates. The
company had requested for a rate hike in Oct 2012 which was
followed by a multi-party settlement agreement in Feb 2013. The
new rates will be effective in two phases with the first phase
beginning on Apr 1, 2013 and the second on Oct 1, 2013.
AES CORP (AES): Free Stock Analysis Report
AVISTA CORP (AVA): Free Stock Analysis Report
CMS ENERGY (CMS): Free Stock Analysis Report
CENTERPOINT EGY (CNP): Free Stock Analysis
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Post approval, natural gas base rates will increase by 4.9%. From
Apr 1, 2013, a residential natural gas customer in Idaho using an
average 60 therms per month would experience a $2.82 per month
increase which would increase the monthly bill to $55.37. In the
second phase, effective from Oct 1, 2013, the customers will
witness an additional increase of 31 cents per month resulting in
a revised monthly bill of $55.68. This 2% or $1.3 million
increase will be offset by a $1.6 million credit to customers.
This amount will be refunded to the customers from Oct. 1, 2013,
through Dec. 31, 2014, bringing the net annual average electric
rate increase to only 0.3%.
Beginning Apr 1, 2013, there will be no change in base rates for
electric customers. However, multi-party settlement agreement
includes a clause for recovery of the costs of the Palouse Wind
Project through the Power Cost Adjustment mechanism.
From Oct. 1, 2013, a residential electric customer using 930
kilowatt hours per month will see an increase of $2.04, bringing
the monthly bill to $80.73. This calls for an increase of 3.1% or
$7.8 million which will be offset by a $3.9 million credit
resulting from a payment made to Avista by the Bonneville Power
Administration related to its prior use of Avista's transmission
system. This amount will be credited to the customers from Oct.
1, 2013, through Dec. 31, 2014, bringing the net annual average
electric rate increase to just 1.9%.
Following this approval, Avista plans to file a general rate case
in 2014. However, there will be no increase in base retail rates
prior to Jan 1, 2015.
The approval provides more certainty to the customers with
respect to rates over the next two years. The main objective
behind the rate increase request was recovery of costs associated
with capital investments and other expenses necessary to maintain
Avista Corporation is engaged in the generation, transmission,
and distribution of energy and other energy-related businesses
primarily in the United States and Canada. Going forward, the
company's significant capital investments in generation,
transmission and distribution systems would add to the top and
bottom line. Moreover, its trend of dividend increase would add
value to the stock. In Feb 2013, Avista Corp. increased its
quarterly dividend by 5.17%, bringing the annualized dividend to
$1.22 per share from the previous payout of $1.16 per share.
However, we remain concerned due to the price fluctuations in the
wholesale power and natural gas markets, lower demand for
electricity and a tepid economy. The company presently retains a
short-term Zacks Rank #3 (Hold).
Other stocks worth considering are
The AES Corporation
CenterPoint Energy, Inc.
CMS Energy Corp.
), all with a Zacks Rank #2 (Buy).