News Item: Laclede Gas (LG) filed a rate case agreement on May 31, 2013 with the Missouri Public Service Commission (MoPSC) this morning, incorporating into Laclede Gas' general rates $14.8 million in annual revenue that is already included in customer bills for costs supporting pipeline safety upgrades. Laclede Gas had requested a revenue increase of $58.4 million, an amount that included the $14.8 million noted above.
Ahead of the Tape: For the first half of fiscal 2013, LG reported earnings of $2.69 per share, compared to $2.38 per share last year. The gas utility contribution rose to $2.46 per share, from $2.09 per share last year, driven by higher sales margins from colder weather, higher ISRS revenue, lower employee benefit costs, and reduced bad debt expenses. LER contributed earnings of $0.25 per share compared to $0.27 per share in 2012. Lower results were due to reduced margins, offset by higher volumes
Comments: While the settlement agreement does not specify a base ROE, future ISRS revenues would be premised on a 9.7% allowed ROE. We expect a decision by mid-July 2013, with an effective date shortly thereafter. While the settled revenue amount is considerably below that requested, LG had earned nearly a 10% ROE over the past several periods primarily driven by the ISRS. We believe that LG can continue to earn near a 10% ROE going forward, considering that the settlement allows continued use of ISRS recovery. A final rate order would allow the MPSC to focus on the timely review of LG's acquisition of Missouri Gas Energy.
Earnings Outlook: Median consensus analyst EPS estimates from Thomson Reuters predict modest growth over the coming annual periods. As demonstrated in the chart below, EPS are expected to increase by 9.5% over the FY2013 to FY2015 periods.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. This abstract was prepared by Finjitsu Research for convenience only and does not claim to be a complete analysis, nor should it be relied upon. This abstract is intended to be a general sample and is qualified in its entirety by the full report, which is not available on this website. This report contains opinions that are inherently biased. In addition, this report was prepared for general circulation and does not provide investment recommendations specific to individual investors. As such, the financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. To review additional important disclosures please visit finjitsu.com/legal. The article has been written by the team at Finjitsu Research, who publish articles under the title Finjitsu Associated Analysts. Finjitsu Research is not receiving compensation for this article. Finjitsu Research has no business relationship with any company whose stock is mentioned in this article.