SCANA Unit Files for Rate Hike - Analyst Blog

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SCANA Corporation 's ( SCG ) regulated subsidiary South Carolina Electric & Gas Company is pushing for electricity rate hikes. The utility filed for a 2.97% consolidated hike on its approved electric rates with the Public Service Commission of South Carolina and the South Carolina Office of Regulatory Staff. The company is confident of getting a favorable ruling owing to the existing provisions of the Base Load Review Act, or BLRA.

The BLRA effectively reduces the cost of building nuclear power plants in South Carolina by allowing the state's regulated utilities to adjust rates annually during the construction of such plants to recover related financing. SCANA and state-owned utility Santee Cooper are currently constructing two nuclear electric-generating units at the site of the V.C. Summer Nuclear Station near Jenkinsville. The excess amount generated from the hike would go towards reducing the need for external funding for the project. Upon approval, the company estimates the rate hike to save approximately $4 billion in cutomers electric rates over the life of the new units.

The new rates if approved, would increase the average monthly bill by 3.1% for a residential customer using 1,000 kilowatts-hours (kWh) of power, by 3.0% for small commercial customers, by 3.1% for medium commercial customers, and finally by 2.7% for large commercial/industrial customers.

SCE&G is a regulated public utility engaged in the generation, transmission, distribution and sale of electricity to approximately 673,000 customers in South Carolina. The company also provides natural gas service to approximately 325,000 customers throughout the state.

SCANA Corporation, headquartered in Cayce, South Carolina, is an energy-based holding company principally engaged, through subsidiaries, in electric and natural gas utility operations and other energy-related businesses.

The company is well positioned in a positive regulatory environment, having a low risk business with outstanding customer growth and operational efficiency. These, in turn, are favorable for stable cash flow generation and growth. Another positive for shareholders is SCANA's utility business mix. The majority of the company's total earnings come from the regulated electricity and natural gas utilities business.

SCANA holds a Zacks Rank #2, which is equivalent to a Buy rating for a period of one to three months. There are other stocks also in the sector which are expected to outperform over the next few months. These include the Zacks Rank #1 (Strong Buy) stocks of Companhia Paranaense de Energia ( ELP ), CPFL Energia S.A. ( CPL ) and the Zacks Rank #2 stock of DTE Energy Company ( DTE ).



CPFL ENERGI-ADR (CPL): Get Free Report

DTE ENERGY CO (DTE): Free Stock Analysis Report

COPEL-ADR PR B (ELP): Free Stock Analysis Report

SCANA CORP (SCG): 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: CPL , DTE , ELP , SCG

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