NextEra Energy, Inc.
's (
NEE
) subsidiary Florida Power & Light Company has filed for a rate
increase with Florida Public Service Commission ("FPSC") to recover
investments made by the company for new, high-efficiency natural
gas power plants. If approved, the new rates will be effective
after January 1, 2013.
Over the last couple of years, NextEra Energy has invested
around $2.4 billion for the construction of clean, high-efficiency,
combined-cycle natural gas-fired energy power plants in Riviera
Beach. These plants will generate electricity by using considerably
less fuel. This high-efficiency generation process will ultimately
lower customer bills in the long term without compromising on the
quality of services.
The company applied for a rate hike to the commission, which
will result in an increase of $6.97 per month for an average
residential customer using 1,000 kilowatt-hours per month. However,
the hike will be marginally offset by $4.49 per month due to lower
fuel usage, lower fuel prices and other adjustments. The net
increase in the consumer's bill will be $2.48 per month.
It is a normal practice for the regulated utility companies to
recover their invested funds from consumers through rate hikes.
NextEra Energy's previous rate hike for consumers happened in June
2011, as it aimed to develop its electric service offerings, foster
economic growth of Florida and expand its business.
Utility providers invest hefty amounts for infrastructural
developments, and the implementation of new technologies, which are
intended to provide uninterrupted power supply to consumers in the
long run. The company has been servicing its consumers in an
efficient manner, which is reflected in the year end growth of
customer level by 10K. We believe growth in customer base is a
positive indicator of the performance level of the company.
We appreciate the steps taken by NextEra Energy for increasing
renewable energy generation along with expansion of its wind and
solar energy portfolio. The company is a well-managed,
high-quality, regulated electric utility provider that serves
high-growth areas in Florida. We also expect the company's earnings
growth to come from its high quality electric service, continued
investments in Florida's utility infrastructure, increasing wind
and solar investments, and exceptional customer service.
But, at the same time, we are cautious about Florida's economy
and uncertainties associated with NextEra Energy's commodity-linked
generation assets.
NextEra Energy currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.
Juno Beach, Florida-based NextEra Energy Inc. is a public
utility holding company engaged in the generation, transmission,
distribution, and sale of electric energy. The company has both
regulated and non-regulated energy-related products and services,
with operations in 24 US states and Canada. The company mainly
competes with
TECO Energy, Inc.
(
TE
) and
Southern Company
(
SO
).
NEXTERA ENERGY (
NEE
): Free Stock Analysis Report
SOUTHN COMPANY (
SO
): Free Stock Analysis Report
TECO ENERGY (
TE
): Free Stock Analysis Report
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