Integrys Energy Inc.’s (TEG - Analyst Report) operating wing Michigan Gas Utilities filed for a hike in natural gas distribution rates with the Michigan Public Service Commission. The company at present has one of the lowest rates among all natural gas companies in the state.
On approval, bills of Michigan customers consuming 880 hundred cubic feet ("CCF") of natural gas will climb by $2.34 per month, which will still be roughly 25% below the rates charged in 2010 on account of plummeting natural gas prices. If approved, it would lead to a 6% rate increase and would come into effect from Jan 1, 2014.
The company intends to recuperate its costs incurred from modernization of its transmission and distribution systems, costs related to customer service functions, declining revenues and general inflation on the back of the rate hike.
For the past three years, Integrys Energy maintained a tight budget and had last requested for a distribution rate increase in Jan 1, 2010. In the time period, the company has been busy upgrading its various natural gas infrastructures, replacing aging steel pipes and remodeling outdated facilities.
If sanctioned, it will help Integrys Energy to continue with its planned $2.5 billion natural gas improvement initiatives in the near term. Last month, the company acquired AGL Resources Inc.’s non-regulated retail gas business for $20 million. This will aid Integrys to expand its profitable sales and marketing portfolio.
Meanwhile, the company will benefit from the expected jump in natural gas consumption, in the U.S., across all sectors barring the residential, as per the Energy Information Administration.
Integrys’ is also looking forward to receiving a positive response for its Wisconsin Public Service's System Modernization and Reliability Project in the third quarter 2013. Also, its ambitious Main Replacement program in Chicago has been progressing at a steady pace.
Integrys’ focus on rate-based investments and diligent efforts to upgrade its service assets will certainly help in customer retention. Currently, the company holds a Zacks Rank #2 (Buy).
The utilities have been filing for rate increases with Dominion Resources Inc. (D - Snapshot Report) and TECO Energy Inc. (TE - Analyst Report) requesting for rate boosts of 2.2% and 10%, respectively.
Based in Chicago, Integrys Energy is a diversified energy holding company, engaged in natural gas and electric utility operations, and non-regulated energy operations in the United States and Canada.