TECO Unit Gets Rate Hike Approval - Analyst Blog

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TECO Energy Inc. 's ( TE ) unit Tampa Electric Company has received approval from the Florida Public Service Commission to increase the monthly rates of the residential electricity customers. The company filed its rate-hike request to the commission on Apr 5. The revised rate will be applicable from Nov 2013.

Currently, the residential customers, consuming electricity of 1,000 kilowatt-hours (kwh) per month, pay a monthly bill of $102.58. As per the commission's approval, the new rate will be $108.25, up 5.5% from the previous rate.

The adjustments of fuel and other related clauses are not reflected in the current rate revision. Considering these factors, the average residential bill will be a total of $109.52, which is expected to be applicable from Jan 2014.

As a result of the electricity rate hike, revenues will initially increase by $57.5 million effective Nov 1, 2013. Subsequently, revenues will increase by an additional $7.5 million and $5 million on Nov 1, 2014 and 2015, respectively, on Nov 1, 2013 revenues. The revenues will further increase by $110 million on completion of the Polk Power Station expansion.

Tampa Electric aims to provide uninterrupted utility services to its customers at lesser prices than its peers. Despite increasing the electricity rates, the residential bills will remain the lowest in the state. According to the Energy Information Administration, the average cost of electricity in the U.S. was $119.50 per month in Jun 2013. The new monthly rate of $108.25 will be approximately 9.4% lower than the national average.

The regulated utility providers recover their investments from the customers through the filing of rate-hike to the commission. Previously, Tampa Electric has requested for a rate increase in 2008. The reason for the filling was to recoup its spending for the improvement of delivery reliability.

In the last few years, TECO Energy invested substantial amounts for upgrading the infrastructure at Polk Power Station and in Big Bend solid-fuel handling equipments, while expanding as well as improving transmission assets.

During 2013-2017, TECO Energy plans to invest $2.98 billion to expand and modernize its utility generation and transmission infrastructure. We appreciate the initiatives taken by the company to provide uninterrupted reliable utility to its customers at a lower price.

TECO Energy currently has a Zacks Rank #3 (Hold). However, other stocks that are worth considering include Huaneng Power International, Inc. ( HNP ) with a Zacks Rank #1 (Strong Buy) and Brookfield Infrastructure Partners L.P. ( BIP ) and IdaCorp, Inc. ( IDA ), each carry a Zacks Rank #2 (Buy).

Tampa, Fla.-based TECO Energy is involved in the generation, purchase, transmission, distribution, and sale of electricity and gas in the state.



BROOKFIELD INFR (BIP): Free Stock Analysis Report

HUANENG POWER (HNP): Free Stock Analysis Report

IDACORP INC (IDA): Free Stock Analysis Report

TECO ENERGY (TE): 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: BIP , HNP , IDA , TE

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