Duke Energy Unit Files Rate Case to Recover Invested Capital

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Duke Energy 's DUK subsidiary Duke Energy Florida ("DEF") filed a rate case for 2019 to the Florida Public Service Commission to recover the investments made to enhance reliability, security and resilience of the existing infrastructure.

DEF is planning to bring more solar power in the system, invest in Citrus Combined Cycle Natural Gas Plant and work on grid improvement.

If approved, the rate revision will hike the monthly utility bills by 88 cents for the customers using 1,000 kWh from Jan 2019.

Modernization Plan

The company is making strategic investments as well as planning to replace aging coal units with new natural gas-fired generation and utility scale solar units. The company is also upgrading existing transmission and distribution assets along with adding battery storage facilities.

Duke Energy's Western Carolinas modernization project is on track and expected to be in service from 2019. Construction of 1,600 megawatt Citrus County combined-cycle plant in Florida is also on track. The unit is expected to serve customers from October 2018.

Importance of Rate Hike

Fundamentally strong and mature utility companies are generally regulated in nature. To serve existing customers with efficiency, the companies are required to focus on assets. Usage of modern technologies makes utility companies more reliable to customers. To provide uninterrupted services, regular investment is the most common and important phenomenon. And to recover the invested capitals, utility companies' files rate hike to the commissions.

Other utilities have also filed for rate hike to maintain the flow of business. Recently, FirstEnergy's FE subsidiary - Potomac Edison - filed a rate case to the Maryland Public Service Commission ("PSC") in nearly 25 years to recover the amount invested in enhancing service reliability, grid flexibility and modernizing existing setups.

NiSource NI plans to invest $1.7-$1.8 billion to strengthen utility infrastructure in 2018. The company filed rate hike applications in different commissions to recover investment and maintain infrastructure strengthening activities.

Price Movement

Shares of Duke Energy have gained 6.6% compared with the industry 's rise of 5.0% in the past six months.

Zacks Rank & Key Pick

Duke Energy currently carries a Zacks Rank #3 (Hold). A better-ranked stock from the same space is NRG Energy, Inc. NRG , sporting a Zacks Rank #1 (Strong Buy). The company delivered an average earnings surprise of 213.28% in the past four quarters. The Zacks Consensus Estimate for earnings moved up 3.5% in the past 30 days. You can see the complete list of today's Zacks #1 Rank stocks here .

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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 Nasdaq, Inc.

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

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