Spire Inc. (NYSE:SR), a natural gas distribution company, has filed a general rate case with the Missouri Public Service Commission (MoPSC) on Monday, seeking approval for an increase in base rates for its service areas. The subsidiary, Spire Missouri Inc., aims to address the costs of maintaining and enhancing the safety and reliability of its natural gas distribution systems, as well as improving customer service.
The proposed rate increase amounts to $289.5 million. However, considering the $53.6 million currently being recovered through the Infrastructure System Replacement Surcharge (ISRS), the net base rate increase request stands at $235.9 million. The rate increase is based on a filed rate base of $4.386 billion.
Since the last general rate filing for the test year ending September 30, 2022, Spire's rate base has climbed by 32%, reflecting substantial investments in infrastructure upgrades and system enhancements. The filing includes adjustments to recovery mechanisms to mitigate the effects of weather variability and energy conservation efforts. It also updates the company's cost of capital and seeks to harmonize the tariffs across the company's service areas.
Spire has proposed a common equity ratio of 55% and a return on equity of 10.5%. The company anticipates updates to certain financial metrics, such as rate base, capital structure, and operating costs, during the rate proceeding.
In other recent news, Spire Inc. and its subsidiary Spire Missouri Inc. have filed a request with the Missouri Public Service Commission for a proposed increase in base rates for natural gas services. The intended increase, amounting to a net of $235.9 million, is aimed at covering system investments and operating expenses necessary for safety, reliability, and improved customer service. The company has also proposed changes to recovery mechanisms and aims to harmonize tariffs across its service areas.
Meanwhile, Spire reported an improved financial performance with fourth quarter earnings surpassing estimates. The company recorded an adjusted loss of $0.54 per share for the quarter ended in September, an improvement from a $0.78 per share loss in the same period the previous year. Revenue, however, decreased by 5.3% year-over-year to $293.8 million.
For fiscal year 2024, Spire reported adjusted earnings of $4.13 per share, an increase from $4.05 per share in fiscal 2023. The company issued fiscal 2025 adjusted EPS guidance of $4.40 to $4.60, notably higher than the current analyst consensus of $4.38.
InvestingPro Insights
Spire Inc.'s recent rate case filing aligns with its financial performance and market position. According to InvestingPro data, the company's market capitalization stands at $4.24 billion, reflecting its significant presence in the natural gas distribution sector. The company's revenue for the last twelve months as of Q4 2024 was $2.59 billion, with a gross profit margin of 37.88%, indicating a solid financial foundation to support its infrastructure investments.
InvestingPro Tips highlight Spire's commitment to shareholder returns, noting that the company "has raised its dividend for 21 consecutive years" and "has maintained dividend payments for 54 consecutive years." This consistent dividend history may appeal to income-focused investors, especially considering the current dividend yield of 4.28%. The company's ability to sustain and grow its dividend while investing in infrastructure upgrades demonstrates a balanced approach to capital allocation.
It's worth noting that Spire is "trading near its 52-week high" and has shown a "strong return over the last month," with a 13.19% price total return in the past month. This recent performance could be indicative of investor confidence in the company's strategic initiatives, including the rate case filing.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. The platform provides a total of 11 tips for Spire Inc., offering a deeper understanding of the company's financial health and market position.
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