Green Bay based Wisconsin Public Service Corporation (“WPS”), a subsidiary of Integrys Energy Group Inc. , has filed an appeal to alter its previous electric and natural gas rate case bids with the Public Service Commission of Wisconsin (“PSCW”). As per the new petition, the company intends to drop its prior 9.2% electric rate increase and appeal for a marginal decrease in gas rates for 2013.
The rate modifications come in the face of improved economic forecasts than that estimated at the outset. Besides, decline in fuel expenses have led to savings which the company hopes to pass on to the consumers. Instead, Integrys Energy plans to utilize the funds for its cost-control initiatives. If the request is approved by the Commission it will result in no electric rate hike.
The company usually files for rate revisions depending upon its operational needs, varying market fundamentals and in order to meet restoration costs rising from unexpected outages or natural disasters. At the end of July 2012, the company’s People Gas and North Shore Gas subsidiaries applied for a natural gas rate hike which required People Gas’s customers to pay less than $6.50 per month and North Shore’s to pay less than $4.0 a month.
Including the 2013 case, the company over the last six years had rate changes with an average increase of less than 1%. The company’s involvement in various high-quality gas and transmission projects has rendered a stable retail rate profile and kept Integrys Energy well positioned in the U.S. utility market.
We believe the company’s continued engagement in strategically significant takeovers like the recent Fox Energy Company LLC for $440 million will boost long-term growth opportunities. In addition, optimum rate charges will enable the company to retain customer confidence and broaden its consumer footprint. However, we believe there is a sense of uncertainty as PSCW could overrule the rate requests proposed by the company which could hurt the company’s business goals. This could impact the company’s stock position in the market.
For 2012, the Chicago-based company anticipates adjusted earnings in the band $3.00–$3.15 per share. The Zacks Consensus Estimates for the third quarter and full year 2012 currently stand at 38 cents per share and $3.09 per share, respectively. One of its closest peers is Wisconsin Energy Corporation (WEC - Analyst Report).
Integrys Energy engages in natural gas and electric utility operations, and non-regulated energy operations in the United States and Canada. With a market capitalization of $4.26 billion, the company has 4,619 employees.