With rising fuel cost projections for 2014,
NextEra Energy Inc.
) business wing, Florida Light & Power announced that
electric rates might increase in Jan 2014. The company released
its estimates in conjunction with the electric utility's annual
filing with the Florida Service Commission.
NextEra Energy intends to file the bill projections with the
Public Service Commission ("PSC") in fall and expects to be
completed by early Dec 2013. Besides the fuel cost increase, the
expected bill includes estimated costs for purchased power,
completed nuclear upgrades, energy conservation programs, nuclear
development, environmental compliance and other non-fuel
components of electric service. The bill doesn't include any
expenses related to the proposed natural gas pipeline system.
Fuel prices are determined through the balancing forces of
demand and supply in the international market. The fuel charge in
the customer bill reflects the real fuel cost that the company
incurs for purchase to generate electricity.
A typical residential customer consuming 1,000 Kilowatt-hour
(kWh) will witness a 5% rise in its bill which translates to 17
cents a day. NextEra Energy is currently busy with its multi-year
modernization plan involving replacement of older oil-fired units
with efficient and clean burning natural gas. This has enabled
the company to counter spiraling prices and allowed customer
cost-savings of over $6 billion since 2001 by generating more
power from cheaper fuel usage.
The latest forecast will not raise an alarm among customers in
spite of the increase; bill charges of $100 will still be lower
than other utility rates and also from the state and national
average range of $124 to $126. NextEra Energy is known for its
cheap and reliable utility services. In 2013, the company's
1,000-kWh fuel charge was at the lowest level in a decade.
Besides NextEra Energy,
Duke Energy Corp.
) also filed an application for fuel cost recovery with the
Florida PSC which called for a bill increase of 7% to $8.24 per
The final decision is uncertain given the high volatility in
natural gas prices. Nonetheless, NextEra Energy's continued
investments in infrastructure modernization along with cost
management efforts will help the company to dominate the Florida
market. The company has been recording consistent customer
growth from 2012 levels.
Currently, NextEra Energy carries a Zacks Rank #3 (Hold).
Other well-placed utility counterparts are Zacks Ranked #2 (Buy)
UNS Energy Corp.
Alliant Energy Corp.
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