The Zacks Utilities sector is off to a mixed start to the first-quarter earnings season, with NextEra Energy (NEE Quick QuoteNEE - Free Report) beating estimates by 7.3% while FirstEnergy Corp. (FE Quick QuoteFE - Free Report) lagging estimates by 3.2%.

Domestic-focused companies operating in the sector have been benefiting from new electric rates, customer additions, cost management, implementation of energy efficiency programs, ongoing investments to improve the resilience of the electric infrastructure against extreme weather conditions and their transition toward cost-effective alternate sources of fuel to produce electricity.

The revival of demand from the commercial and industrial groups of customers has been assisting the utility operators. Improvement in economic conditions after the pandemic has been generating fresh demand for utility services.

Yet, the performance of the capital-intensive utilities is likely to have been adversely impacted by the increase in interest rates from near zero levels. An increase in borrowing costs and the resultant rise in interest expenses are likely to have adversely impacted earnings of the companies operating in the space.

In the reported quarter, the utilities are expected to have benefited from higher demand. Cold winter months and above-average temperature in the month of March are expected to have boosted demand for electricity.

Per the current Earnings Trends report, the utility sector’s first-quarter earnings are expected to increase 9.3%, while revenues are estimated to decline 8%. Utilities is among the 10 Zacks sectors that are expected to earn more in the first quarter than the year-ago period.

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Southern Company’s (SO Quick QuoteSO - Free Report) first-quarter earnings are likely to have benefited from higher demand from industrial customers. SO’s expanding customer base is also expected to have boosted demand and had a positive impact on earnings. (Read more: Can Southern Sustain Its Beat Run in Q1 Earnings Show?)

Our proven model predicts an earnings beat for Southern Company this time around. It has an Earnings ESP of +2.16% and a Zacks Rank of 3.

PG&E Corporation’s (PCG Quick QuotePCG - Free Report) } first-quarter earnings are likely to have benefited from favorable weather conditions, which, in turn, are expected to have boosted demand. Cost-reduction initiatives are also expected to have a positive impact on earnings. (Read more: PG&E  to Report Q1 Earnings: What's in the Offing?)

Our proven model predicts an earnings beat for PG&E Corp. this time around. It has an Earnings ESP of +1.96% and a Zacks Rank of 3.

Alliant Energy’s (LNT Quick QuoteLNT - Free Report) first-quarter earnings are likely to have benefited from higher demand from commercial and industrial customer groups. Earnings are also expected to have gained from contribution from increasing capital investments and the Allowance for Funds Used During Construction benefits from its solar projects under construction. (Read more: Alliant Energy to Post Q1 Earnings: What's in Store?)

Our proven model does not conclusively predict an earnings beat for Alliant Energy this time around. It has an Earnings ESP of 0.00% and a Zacks Rank of 3.

Xcel Energy’s (XEL Quick QuoteXEL - Free Report) first-quarter earnings are likely to have benefited from the expanding customer base and interim rate increase. The positives are expected to have been offset by an increase in operation & maintenance expenses. (Read more: Xcel Energy to Report Q1 Earnings: What's in the Offing?)

Our proven model does not conclusively predict an earnings beat for Xcel Energy this time around. It has an Earnings ESP of -1.45% and a Zacks Rank of 3.

American Electric Power Company, Inc.’s (AEP Quick QuoteAEP - Free Report) first-quarter earnings are likely to have been impacted by mixed weather conditions in its service territories. The expected increase in operating expenses is likely to have impacted earnings. (Read more: What's in Store for American Electric in Q1 Earnings?)

Our proven model does not conclusively predict an earnings beat for American Electric Power this time around. It has an Earnings ESP of-0.07% and a Zacks Rank of 3.

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