Utility major
FirstEnergy Corporation
's (
FE
) electric subsidiary, Jersey Central Power & Light
("JCP&L"), submitted an application to the Jersey Board of
Utilities ("BPU") for modification in base rates.
The filling entails cost recovery related to capital spending
on infrastructure modernization projects. These upgrades are
necessary for service reliability as well as technological
modernization like advanced storm response systems, smart-grid
projects and enhancement of distribution systems. The application
also includes costs linked to restoration activities undertaken
during Hurricane Irene and the October snowstorm in 2011. Later,
cost associated with Hurricane Sandy will also be included in the
rate filling.
The $31 million tender filed for rate amendment was in
response to BPU's previous order to the company to submit base
rate case comprising details related to operation, maintenance
and capital expenditures.
On receiving approval from BPU, electric rates will rise 1.4%
on an average for a JCP&L customer. Residential customers
consuming 650 kilowatts hours of electricity will witness an
increase of $1.51 in their per month billings depending on the
amount of usage.
The company will derive significant top-line benefits upon
receiving the approval for electric base rate hikes and also
secure stable margins. JCP&L customers will also stand to
gain from the proposed rate changes as they will be charged the
lowest among the four regulated electric companies in the state.
This will help in customer loyalty retention and even attract new
customers.
The Zacks Consensus Estimates for the fourth quarter and full
year 2012 are currently pegged at 85 cents and $3.35 per share,
respectively.
We believe that the challenging U.S. economic conditions
notwithstanding, FirstEnergy's retail business will continue to
hold its ground and perform well. The company retains a
short-term Zacks #3 Rank (Hold rating).
Another utility sharing a Zacks #3 Rank is
Dominion Resources Inc.
(
D
). Dominion is also looking to accrue high returns from rate case
in its North Carolina business subject to regulatory
approval.
Based in Akron, FirstEnergy through its subsidiaries engages
in the generation, transmission, and distribution of
electricity.
DOMINION RES VA (D): Free Stock Analysis
Report
FIRSTENERGY CP (FE): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research