NUI Corporation Receives Approval for Rate Increase from Florida Public Service Commission

Strategic Insights -

The Florida Public Service Commission has approved a settlement agreement with City Gas Company, a division of NUI Corporation, on its general rate case filed in May 1994. The agreement provides for an annual increase in revenues of $1.6 million and a return on equity of 11.3 percent, with an overall rate of return of 7.26 percent on a projected rate base of $82.6 million. The increase is expected to become effective in 30 days, resulting in a typical residential bill increase of approximately $1.03.

Key Takeaways:

  • The Florida Public Service Commission approved a settlement agreement with City Gas Company, a division of NUI Corporation, on its general rate case.
  • The agreement provides for an annual increase in revenues of $1.6 million.
  • The Commission approved a return on equity of 11.3 percent and an overall rate of return of 7.26 percent on a projected rate base of $82.6 million.
  • The increase will result in a typical residential bill increase of approximately $1.03.
  • The FPSC included City Gas' investment in a high pressure natural gas line in Brevard County, which serves the Kennedy Space Center, in the rate base.
  • The company's entire $4.7 million investment in the high pressure natural gas line will be recovered in the rate increase.
  • The FPSC also approved additional capital costs for City Gas' investment in a natural gas distribution system for its new Port St. Lucie Franchise area, valued at $2.2 million.
  • The FPSC approved several tariff changes, including an experimental rate to promote growth in developing markets for natural gas.
  • The company intends to pursue higher returns on its leased appliance business, which includes leasing water heaters, clothes dryers, and ranges to promote natural gas usage.
  • Cit Gas has a net investment of $14.9 million in the appliance business, with revenues of $2.4 million and Operating Income Before Taxes of $426,000 for the latest fiscal year.

Statistics:

  • $1.6 million: annual increase in revenues for City Gas Company.
  • 11.3 percent: return on equity approved by the Florida Public Service Commission.
  • 7.26 percent: overall rate of return on a projected rate base of $82.6 million.
  • 82.6 million: projected rate base of City Gas Company.
  • $19.47: average monthly residential bill prior to the rate increase.
  • $1.03: increase in typical residential bill as a result of the rate increase.
  • 30 days: time frame for the rate increase to become effective.
  • $358,000: costs associated with Hurricane Andrew that will be recovered by City Gas.
  • $338,000: non-recurring reduction in NUI's Net Income for the first quarter of 1995.

Sources:

  • BUSINESS WIRE, "NUI Corporation Receives Approval for Rate Increase from Florida Public Service Commission," December 2, 1994.
  • NUI Corporation, "City Gas Company Receives Approval for Rate Increase," December 2, 1994.
  • Florida Public Service Commission, "Order Approving Rate Increase for City Gas Company," December 2, 1994.