FirstEnergy Corporation (FE - Free Report) recently announced that Public Service Commission (PSC) of West Virginia has approved new rates for the subsidiaries- Mon Power (“MP”) and Potomac Edison (“PE”). The agreement will lower electric rates by more than $77 million in 2019. The new rates are effective from Jan 1, 2019 to Dec 31, 2019.
Customers to Benefit From Rate Reduction
Utility companies are generally regulated in nature. These regulated companies are required to make investments toward addition, upgrade and maintenance of utility infrastructure. The utilities recoup the invested amount through rate revisions approved by the commissions. However, these companies frequently undertake initiatives to provide customers with lower bills. FirstEnergy will offer lower rates to West Virginia customers on the back of reduced costs for fuel, purchased power and energy efficiency programs lead.
A typical residential customer that consumes 1,000 kilowatt-hours of electricity will receive reduction of 2.2% in monthly bills. The bill for West Virginia customers will drop to $105.83 from the current $108.25. The new rates will be 19% lower than national average.
Federal Tax Cut Benefits Customers
MP and PE provide electric service to West Virginia customers through traditional cost-based and regulated utility ratemaking. MP serves 385,000 customers in West Virginia and tries to provide better services with affordable cost. This will mark the second time in recent time when customers will receive reduced bills. In Sep 2018, monthly bills were reduced by $4, which includes effects of federal tax cut.
In 2018, other large electric utilities like NextEra Energy, Inc (NEE - Free Report) , Duke Energy Corp (DUK - Free Report) and Exelon Corp (EXC - Free Report) passed their tax benefits to customers to reward them with lower bills.
Shares of FirstEnergy have rallied 21.9% in the past year, against the industry’s decline of 0.5%.
FirstEnergy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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