Unitil foresees growth in natural gas as electric usage drops
Quarterly earnings up about 10% despite less consumption
Electric usage dropped 6.1% in the second quarter compared the same quarter last year and 5.1% year to date compared to the first half of 2018. The company actually has more than 500 more customers than before, but those customers are using less.
“This is largely a result of reduced usage per customer due to energy efficiency initiatives,” Christine Vaughan, the Hampton based utility’s CFO told investors in a post earning call Friday.
New Hampshire substantially increased funding for energy efficiency in the past few years. The state’s Public Utilities Commission has imposed an energy efficiency resource standard, increasing the system benefits charges portion of customer’s bills to pay for it.
The drop off in usage didn’t hurt the company’s bottom line. Quarterly earnings were up about 10% to $4 million or 3 cents a share for the quarter, and up by $11.3 million to $30.5 million for the first half of the year, though most of that jump was due the $9.8 million sale of Usource, Unitil’s former unregulated energy broker, in the first quarter.
Unitil has long since moved on from being primarily an electric company. It diversified to natural gas with the purchase of Northern Utilities in 2008. In the first half of this year, slightly more revenue came in from gas than electric. Gas sales went up, partly because the company keeps on expanding its service area by constructing more local gas lines, and partly because customers are converting from oil to gas for economic and environmental reasons.
Gas usage went up 2.2% year to date compared to last year, but would have gone up 5.5%, if weather and temperature comparisons were taken into account.
Gas revenues actually went down slightly because of a one-time rate adjustment.
The company didn’t disclose weather-normalized electric usage. Vaughan did say that weather also contributed to a decrease in electric usage, however the primary reason was Unitil’s industrial customers were able to keep their usage down. Commercialized and industrial electric usage dropped 6.3% in the last quarter.
Despite that, Unitil’s revenue for electric sales actually went up slightly over last year because the state allowed the utility to sell electricity at higher margins. Unitil also cut expenses, particularly those related to storms, last quarter.
Unitil is expected to spend about 20% more in capital infrastructure over the next three years compared to last three, mainly to build out its gas infrastructure. In the last five years, the utility installed about 100 miles of new gas mains, said CEO Tom Meissner.