NiSource's (NI) Arm Proposes Rate Revision to the Commission

·3-min read

NiSource Inc.’s NI subsidiary Columbia Gas of Maryland, Inc has filed a rate revision request with the Maryland Public Service Commission (PSC). The adjustment in rates, if approved, will not be effective before December 2021.

Impacts of Rate Revision

Following the regulatory nod, the average total bill for the unit’s residential customers who consume 70 therms of gas per month will increase 11.35%. The same for a small commercial customer who requires 250 therms of gas will shoot up 8.57% and that of an industrial customer purchasing 4,590 therms will rise 6.23%.

Notably, if the rate hike proposal is approved without any change, it will increase annual revenues by $6.3 million.

Need for Rate Revisions

NiSource has a 100% regulated utility business model. The rate revision at regular intervals allows the company to recoup the investments already made to upgrade and expand its infrastructure for the benefit of its consumers. Columbia Gas of Maryland has already invested $192 million in its service territories since 2009 to strengthen its system. The anticipated rate hike will allow it to continue with its future infrastructure enhancement plans.

NiSource made capital investments worth $1.8 billion and $367 million in 2020 and during first-quarter 2021, respectively. Over the 2021-2024 time frame, the company is going to invest in the $9.6-$10.7 billion range. Further, it estimates a $40-billion ($10 billion higher than the previous guidance) long-term infrastructure investment opportunity. Therefore, to carry out regular investments, rate hike application at regular intervals and its subsequent approval are quite essential for the regulated utilities.

Utilities Cutting Down on Emission

NiSource has a well chalked-out plan to lower emission from its entire operations. It is set to replace 80% of its coal-generating sources by 2023 and 100% by 2028 with reliable and cleaner options at lower costs. The company aims to reduce greenhouse gas emissions by 90% within 2030 from its 2005 levels and save more than $4 billion for customers of more than 30 years. It also aims to invest nearly $2 billion, primarily in 2022 and 2023, to meet its renewable goals.

Other utilities like Xcel Energy XEL, Duke Energy DUK and DTE Energy DTE among others also have plans in place to achieve net-zero emissions within 2050.

Zacks Rank & Price Performance

In the past three months, shares of this currently Zacks Rank #3 (Hold) company have gained 12.8%, outperforming the industry’s rise of 5.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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