New Jersey Resources' Unit Files for Gas Rate Revision

New Jersey Resources NJR announced that its unit, New Jersey Natural Gas ("NJNG"), has filed for a rate revision with New Jersey Board of Public Utilities ("BPU"). If the rates are approved without any change, it should increase the utility bill of a typical residential customer using 100 therms a month by 0.5% or 71 cents per month. NJNG expects the rate adjustment to take effect from Oct 1, 2024, subject to the approval of BPU.
In this rate revision filing, NJNG has asked for a reduction in its annual Basic Gas Supply Service (BGSS) rate, which is offset by an equal increase to its Balancing Charge. Winter weather remained warmer-than-normal year over year, resulting in a minimal decrease of 0.1% related to the Conservation Incentive Program ("CIP"). In its energy-efficiency recovery filing, NJNG seeks a 0.6% increase to recover costs associated with the investment in its SAVEGREEN programs.
BGSS and Balancing Charge recover the cost of natural gas supplied to customers and balance deliveries with customer usage. CIP helps normalize year-to-year fluctuation from changing weather and usage patterns on both customers' bills and NJNG's financial margins.

Investments to Strengthen Operation

New Jersey Resources makes consistent investments to upgrade and maintain its existing infrastructure. The company expects capital investments to be in the range of $619-$754 million and $578-$742 million for fiscal 2024 and 2025, respectively.  The planned capital expenditure should support and expand the infrastructure of the company and allow it to serve its expanding customer base. Systematic capital expenditure is likely to support long-term earnings growth target of 7-9%.

Price Performance and Zacks Rank

New Jersey Resources currently has a Zacks Rank #3 (Hold). In the past three months, shares of the company rose 2.9% compared with its industry's growth of 6.8%.

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Demand for Clean Source of Energy to Rise

The clean-burning nature, wide availability of natural gas across the United States and rising awareness against emission are increasing the demand for natural gas. Per the American Gas Association report, one residential customer signs up for natural gas service every minute and 80 businesses add natural gas service each day.

The rising demand and usage of natural gas should create growth opportunities for Atmos Energy Corporation ATO, MDU Resources MDU and UGI Corporation UGI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The current dividend yield of Atmos Energy, MDU Resources and UGI is 2.78%, 1.98% and 5.89%, respectively, better than the Zacks S&P 500 composite's 1.57%.
The Zacks Consensus Estimate for ATO, MDU and UGI fiscal 2024 earnings per share has moved up 0.9%, 1.3% and 2.1%, respectively, in the past 60 days.

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