ONEOK Unit Files for a Rate Hike - Analyst Blog


ONEOK, Inc. 's ( OKE ) subsidiary, Kansas Gas Service has filed for a rate increase with the Kansas Corporation Commission ("KCC") to recover the investments made by the company to develop its natural gas pipeline infrastructure and facilities. The rate hike, if approved by the KCC, is expected to increase the company's revenue by $32.7 million, which includes a base rate hike of $50.7 million and $18 million decrease in amounts currently recovered through surcharges. 

The company's proposed rate hike, if implemented, will result in a monthly increase of $5.68 or 9.1% for a typical residential customer. An average commercial customer, with annual natural gas consumption of 288 thousand cubic feet ("Mcf"), will not experience any bill increase. Last time, the company hiked its rates in January 2007.

Since the last rate increase, the ONEOK unit has invested $250 million to upgrade its natural gas distribution pipelines, and replaced and relocated natural gas meters in several cities in Kansas including Hope, Kowa, Mankato, Osawatomie, Russell, Stafford and St. John. This had enabled the company to cover a total area of 18,000 miles in Kansas.

Utility providers invest substantial amounts for implementation of modern technologies and infrastructural developments, intended to provide uninterrupted and regular gas supply to its consumers in the long run. As of December 31, 2011, the company had a 632,000 strong customer-base with natural gas distribution market share of 67% in the Kansas area. 

ONEOK Inc. currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Based in Tulsa, Oklahoma, ONEOK Inc. is a diversified energy company, operating as a natural gas distributor primarily in the United States. The company competes with OGE Energy Corporation ( OGE ).

OGE ENERGY CORP (OGE): Free Stock Analysis Report
ONEOK INC (OKE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: OGE , OKE

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