Tampa Electric, the principal subsidiary of TECO Energy (TE), recently submitted its annual fuel report to the Florida Public Service Commission (FPSC). Lower fuel and purchased power costs during the first half of 2009 and reduced estimates for the remaining half of 2009 and 2010 will bring down the fuel portion of electricity bills of all consumers from January. Tampa estimates the fuel charge for a residential consumer using 1,000 kilowatt-hours of electricity per month to decline by $6.32.
This reduction in electricity bills will more than offset the rise to the base rate part of the bill, which was approved by the FPSC this March and will come in effect from January. Consequently, the monthly bill for a residential consumer using 1,000 kilowatt-hours will be $113.21, resulting in an overall reduction of $1.46. This, however, is subject to requisite approvals by the FPSC.
TECO is a holding company, conducting regulated utility operations in Florida, through Tampa Electric, which supplies electricity to over 667 thousand consumers and Peoples Gas System, which supplies natural gas to over 335 thousand consumers. TECO’s other subsidiaries include TECO Coal, which owns and operates coal production facilities in Kentucky and Virginia, and TECO Guatemala, which deals in electricity generation and distribution and energy-related businesses in Guatemala.
Shares of TECO Energy closed at $13.17 on Tuesday, trading at 14.0X trailing 12-month EPS versus 11.8X of the peer group. We maintain our Neutral recommendation for the company.
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