New Hampshire local natural gas distribution utility of
) has made a request for an increase in natural gas distribution
base rates. The request is made to New Hampshire Public Utilities
Commission (NHPUC). It also includes an appeal to get the rates
temporarily effective from Jul 1, 2013.
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The request calls for an increase of $5.2 million in base revenue
or an increase of approximately 9.4% over current operating
revenue. The company expects to receive a final decision in
Over the next several years, Unitil Corporation intends to make
operational and safety-related improvements and upgrades in its
gas distribution system in New Hampshire. These rate requests, if
approved, would help the company in recovering the costs incurred
in making these improvements.
At the beginning of April, the company placed a request with
Maine Public Utilities Commission for a $4.6 million hike on its
base revenue or an increase of roughly 6.3% over the current
operating revenue in its Maine division. This request closely
followed the recovery of costs that were invested earlier for the
improvisation of operational and safety arrangements.
Unitil Corporation invests in infrastructural development, and
implementation of new technologies related to utilities
generation, transmission and distribution. Meanwhile, natural gas
prices have plummeted to approximately half the cost of oil,
thereby increasing the demand for gas. With demand rising from
low nat gas prices, upgrades in infrastructure are essential for
uninterrupted supply to customers.
Unitil Corporation is engaged in the distribution of electricity
and natural gas in the United States. It distributes electricity
in the southeastern seacoast and state capital regions of New
Hampshire, and the greater Fitchburg area of north central
Massachusetts; and distributes natural gas in southeastern New
Hampshire, portions of southern Maine to the Lewiston-Auburn
area, and in the greater Fitchburg area of north central
We believe that strong natural gas fundamentals will fuel Unitil
Corporation's financial performance in the future, not only for
its pricing but also for its environmental benefits and
emission-free nature. All the more, rate base increase followed
by a low natural gas price does not keep the customers away from
taking the cost advantage of low prices.
However, we are concerned about the pending regulatory cases and
uncertainty with respect to natural gas prices. The company
presently retains a short-term Zacks Rank #4 (Sell).
Other stocks worth considering are
Huaneng Power International, Inc.
Pike Electric Corporation
). While Huaneng Power and Pike Electric carry a Zacks Rank #1
(Strong Buy), Ameren Corporation holds a Zacks Rank #2 (Buy).