Duke Energy Corp.’s (DUK - Free Report) subsidiary, Piedmont Natural Gas, has recently secured approval from the Tennessee Public Utility Commission (TPUC) to decrease natural gas rates for its customers in Tennessee. The rate reductions are effective on an immediate basis and will be reflected in customers' March 2020 bills.
Notably, Piedmont's natural gas rates for Tennessee customers are now at a record low compared to the last 15 years. Over the past year, this marks the second rate decrease enacted by the company.
Tennessee Customers to Benefit From Rate Reduction
Utility companies are mostly regulated and require systematic investments in infrastructural development. Maintained and upgraded infrastructure enables utility companies to provide reliable services to their customers. The utilities recoup the invested amount through rate revisions approved by the commissions. However, the usage of cheaper fuel and the introduction of new technology in generation and distribution systems enable the utilities to reduce rates.
Courtesy of the rate reductions, average residential customers of Piedmont Natural Gas in Tennessee will save around 20% compared with the year-ago savings. This, in total, translates to a savings of around $167 per year, approximately $14 lower per month from the previous year. Additionally, commercial and industrial customers will also see a savings of approximately 20% compared to the prior year.
Natural Gas Consumption to Grow in US Industrial Sector
Natural gas consumption in the U.S. industrial sector will continue to grow in 2020 and is expected to increase 4.6%, per a report by the U.S. Energy Information Administration (EIA). The increase in consumption will arise from the new methanol plants that are scheduled to come online in 2020.
In line with such projections, other companies engaged in the generation and distribution of natural gas, like Dominion Energy (D - Free Report) , Algonquin Power & Utilities Corp. (AQN - Free Report) and Devon Energy Corporation (DVN - Free Report) , also look ahead to grow their natural gas businesses.
Price Movement & Zacks Rank
This Zacks Rank #3 (Hold) stock has gained 0.9% in the past three months against the industry’s decline of 5.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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