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NiSource Unit Files for Additional Revenue Hike in Virginia

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NiSource’s (NI - Free Report) subsidiary — Columbia Gas of Virginia — has sought approval for additional revenue increase of $22.2 million per year from the Virginia State Corporation Commission (SCC) to recover the investments made for infrastructure investment programs. The rate hike includes savings associated with the Tax Cuts and Jobs Act of 2017.

If approved the rate revision will raise the average total monthly natural gas bill for a typical residential customer by $5.61 per month or 7.5% from the current levels. The new rates will become effective from Feb 1, 2019.

Investment Plans

NiSource provides natural gas, electricity and other products and services in the United States. To provide safe and reliable service to customers through enhanced gas system and reduce greenhouse gas emissions, continuous investments on infrastructure is necessary.

The company has long-term plans to invest worth $30 billion on regulated infrastructure. Of which, the company will invest nearly $20 billion to strengthen gas operations. NiSource plans to bring natural gas to un-served areas and provide infrastructure to support economic growth.

Importance of Rate Increase

Utility companies are generally regulated and look forward to rate hikes at periodic intervals to recoup the amount invested to upgrade and strengthen infrastructure as well as modernize the generation fleet. Infrastructure upgrade increase reliability of services and enables the company to provide an uninterrupted supply of basic amenities to customers.

NiSource has a 100% regulated utility business model and more than 75% of the company’s capital expenditure starts to provide return within the 12 months of investment. The recovery of the invested capital allows the company to continue with infrastructure improvement initiatives.

Price Movement

Shares of NiSource have inched up 0.1%, against the industry’s decline of 6.0% in the past 12 months.

Zacks Rank & Key Picks

NiSource carries a Zacks Rank #3 (Hold). A few better-ranked stocks from the same space are NRG Energy, Inc (NRG - Free Report) , Algonquin Power & Utilities Corp (AQN - Free Report) and Ameren Corporation (AEE - Free Report) .

NRG Energy sports 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.

Algonquin Power & Utilities holds a Zacks Rank #2 (Buy). The company delivered an average earnings surprise of 36.39% in the past four quarters. The Zacks Consensus Estimate for earnings moved up 5.2% in the past 30 days.

Ameren Corporation holds a Zacks Rank #2. The company delivered an average earnings surprise of 7.69% in the past four quarters. The Zacks Consensus Estimate for earnings moved up 3.0% in the past 30 days.

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