Most utilities see drop in recurring EBITDA margin in Q3'21

The recurring EBITDA margin for 17 out of 25 of the most profitable utilities in the U.S. and Canada declined in the third quarter of 2021, according to S&P Global Market Intelligence data.

NextEra Energy Inc. saw the largest year-over-year slide, at 7.5 percentage points, ending the quarter with a recurring EBITDA margin of 45.1% of recurring revenues.

The company reached a record for origination in the third quarter, setting itself up for "tremendous" growth in renewables, NextEra executives said during their third-quarter earnings call.

PPL Corp. recorded the second-largest year-over-year slide, at 7.2 percentage points, but retained its spot as the third-most profitable utility, with a recurring EBITDA margin of 48.2%.

PPL has started deploying proceeds from the £7.8 billion sale of its U.K. distribution utility operations to National Grid PLC. The company is looking at investing more capital in its regulated utilities and increasing share buybacks, as well as reducing debt. Part of the proceeds will be used to fund PPL's acquisition of National Grid's Rhode Island utility Narragansett Electric Co. for $3.8 billion.

National Fuel Gas Co. continued to be the most profitable utility in the U.S. and Canada, after its recurring EBITDA margin improved the most year over year, at 6.8 percentage points. The gas utility, which operates in western New York and northwestern Pennsylvania, had a recurring EBITDA margin of 57% of recurring revenues.

National Fuel during its fiscal fourth-quarter earnings call raised its earnings guidance 22% to more than $5 per share for fiscal year 2022 on high oil and natural gas prices.