Spire Inc. (NYSE: NYSE:SR) and its subsidiary Spire Missouri Inc. have made a filing with the Missouri Public Service Commission (MoPSC) on Monday for a proposed increase in base rates for natural gas services. The filing, dated November 25, 2024, indicates that the increase is intended to cover the costs of system investments and operating expenses necessary to ensure safety and reliability, as well as to improve customer service.
According to the details of the filing, Spire is asking for a base rate rise of $289.5 million. However, considering $53.6 million is already being recovered from customers through the Infrastructure System Replacement Surcharge (ISRS), the net base rate increase request amounts to $235.9 million. This request is based on a filed rate base of $4.386 billion, which has grown by 32 percent since the last general rate filing for the test year ending September 30, 2022. This substantial increase reflects significant investments in infrastructure enhancements.
The proposal also includes changes to recovery mechanisms to mitigate the financial impact of weather fluctuations and conservation efforts, updates the company's cost of capital, and aims to harmonize the tariffs across the company’s service areas. Spire has proposed a capital structure with a common equity ratio of 55.0% and a return on equity at 10.5%. It is expected that figures such as rate base, capital structure, and operating costs will be revised during the rate proceeding process.
In other recent news, Spire Inc. reported a significant improvement in its financial performance, with fourth quarter earnings surpassing estimates and the company issuing an upbeat outlook for fiscal 2025. The natural gas utility 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 the full fiscal year 2024, Spire reported adjusted earnings of $4.13 per share, an increase from $4.05 per share in fiscal 2023. The company also reaffirmed its long-term adjusted EPS growth target of 5-7%. Looking ahead, Spire issued fiscal 2025 adjusted EPS guidance of $4.40 to $4.60, notably higher than the current analyst consensus of $4.38.
These recent developments reflect a positive operational performance across Spire's key business segments, aided by new rates and lower operating expenses within the company's gas utility segment, alongside significant growth in midstream earnings due to new storage capacity and acquisitions.
InvestingPro Insights
Spire Inc.'s recent filing for a base rate increase aligns with several key financial metrics and trends highlighted by InvestingPro. The company's market capitalization stands at $4.24 billion, reflecting its significant presence in the utility sector. Notably, Spire has maintained dividend payments for 54 consecutive years and has raised its dividend for 21 consecutive years, as per InvestingPro Tips. This consistent dividend history underscores the company's commitment to shareholder returns, even as it seeks to invest in infrastructure and manage operating expenses.
The company's P/E ratio of 17.42 and its dividend yield of 4.28% suggest a balance between growth and income for investors. Spire's revenue for the last twelve months as of Q4 2024 was $2.59 billion, with an operating income margin of 19.17%, indicating a solid financial foundation to support its proposed rate increases and infrastructure investments.
InvestingPro Tips also reveal that Spire is trading near its 52-week high, with a strong return over the last month. This positive market sentiment may reflect investor confidence in the company's strategic moves, including the recent rate increase proposal.
For readers interested in a deeper analysis, InvestingPro offers 11 additional tips for Spire Inc., providing a comprehensive view of the company's financial health and market position.
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