TECO Energy Inc.
) subsidiary TECO Peoples Gas announced its plans to commence a
10-year aggressive program with annual investment of $8 million for
replacing cast-iron and bare steel natural gas distribution pipes.
This project has already received approval from the Florida Public
Per the program, TECO Energy will install high-density polyethylene
pipes or coated steel pipes replacing cast-iron and bare steel
This project will have social, economic and environmental benefits.
The U.S. Department of Transportation rolled out rules regarding
the maintenance of distribution pipeline standards after two
mishaps at San Bruno, California and Allentown, Pennsylvania.
This program will enable the company to meet current
distribution pipeline standards. In addition, the company will
supply natural gas to its Florida customers in a much more safer
and reliable manner.
TECO Energy started its older pipe replacement program more than a
decade ago. The company intends to begin its 10-year program from
January 2013 and will put back approximately 150 miles of cast-iron
pipe and roughly 400 miles of bare steel pipe.
TECO Energy has reported that this replacement program will cost
roughly 5 cents per month for residential natural gas customers in
2013. It is a regular practice for the regulated utility companies
to recover their invested funds from consumers through rate
increase. We do believe the increment in monthly natural gas bill
stretches the budget of the residential consumers. However, at the
same time, these infrastructure developments ensure uninterrupted
gas supply throughout the year.
We have observed that TECO Energy has focused on infrastructural
development over the last few years. In April 2012, the company
signed a pact with Florida Public Utilities Company, a wholly-owned
Chesapeake Utilities Corporation
) for the distribution of natural gas to Nassau County and Amelia
Per the contract, the companies installed a 33-mile long natural
gas pipeline in Nassau County and Amelia Island to link the Peoples
Gas Jacksonville system with
) container-board manufacturing mill in Fernandina Beach.
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We have observed that TECO Peoples Gas' performance improved in
second-quarter 2012 owing to gradual economic development in
Florida and customer growth. Alongside, we believe that the demand
for metallurgical coal in the Asian markets will improve on the
back of higher production of steel and electricity generation,
particularly in India and China. We expect this trend to continue
to benefit the company's performance going forward.
In second-quarter 2012, TECO Peoples Gas reported net income of $9
million versus $5.9 million in the year-ago quarter driven by
higher sales to residential consumers resulting from customer
additions, greater volume sold to commercial and industrial users
and decline in non-fuel operations and maintenance expenses.
During second-quarter 2012 earnings call, TECO Energy lowered its
full-year 2012 earnings guidance to $1.20-$1.30 per share from the
prior estimate of $1.30-$1.40 per share due to the negative effect
of mild weather.
As per the Zacks Consensus Estimates, TECO Energy's earnings for
the third-quarter and full-year 2012 are currently pegged at 41
cents per share and $1.25 per share, respectively.
Tampa, Florida-based TECO Energy Inc. is involved in regulated
utility operations. Through its subsidiaries, it generates,
transmits, distributes, purchases and sells electric energy in
Florida and Guatemala. TECO Energy Inc. currently holds a Zacks #4
Rank, which translates into a short-term Sell rating.