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'Challenging but rewarding year' for Unitil, CEO says

2016 was a "challenging but rewarding year" for Unitil Corp., according to Chairman and CEO Robert Schoenberger.

The company began the quarter with a $0.20 loss due to warm winter weather, but was ultimately able to compensate and meet its goal of a 3% increase in EPS, Schoenberger said during Unitil's fourth-quarter 2016 earnings call Feb. 2. That goal was met due to a multitude of measures, including cost control, new rates and growth in its gas business, he said.

Unitil added 2,200 new gas and electric customers in its service areas in 2016 and expects the upward trend to continue. "For the third year in a row, we increased our annual dividend by $0.02, from $1.42 to $1.44," Schoenberger said, adding that the company expects this to continue in the future.

Additionally, the company predicts "great growth potential" in its service areas, according to Schoenberger. "We conducted an economic study that basically concluded that the Portland and Portsmouth metro areas are the fastest-growing areas in New England," he said. "We are aware of hundreds of millions of dollars of new development work in these areas, so we feel really confident about our growth story."

COO Tom Meissner pointed to benefits Unitil is already seeing from investments in its electric operations. "In 2016, our customers were the beneficiaries of the best reliability we've ever achieved," Meissner maintained. Compared to the industry average, Unitil's customers have 15% less "downtime" each year, according to Meissner. He also said Unitil continues "to meet or exceed all service quality metrics for safety, reliability and customer service."

In April 2016, the company completed and energized a new substation in Kingston, N.H., to provide capacity and enhance reliability, Meissner said. Another new substation is expected to become operational in the second quarter of 2017. Unitil invested around $26 million total in the projects, which "will provide the capacity needed for continued growth and reliability improvement, while also addressing constraints at existing substations," Meissner said.

Regulatory approval was also granted to the company for its first solar generation project in Fitchburg, Mass. The 1.3-MW facility carried a price tag of around $3.5 million and is projected to be operational and included in Unitil's utility rate base by the end of the current year, Meissner said.

He noted that the company continues to be committed to the "changing regulatory climate," and is actively participating in grid modernization dockets in both Massachusetts and New Hampshire. "In Massachusetts, regulatory approval of our 10-year grid modernization plan, with estimated spending of $24 million, is expected in 2017."

"In New Hampshire, we anticipate the conclusion of the grid modernization proceeding and an order outlining the next steps in that jurisdiction," Meissner said. "These projects will be an important component of our investments in capital spending for the foreseeable future."

Unitil, on Feb. 2, posted fourth-quarter 2016 net income of $10.2 million, or 73 cents per share, compared with $9.3 million, or 67 cents per share, for the corresponding quarter of 2015.

Fourth-quarter natural gas revenues were up, to $57.1 million in 2016 from $53 million in 2015, with gas sales margins increasing $3.1 million year over year to $31.9 million in the most recent quarter due to higher distribution rates and customer growth.

Electric revenues were down $2.2 million year over year to $47.9 million, with electric sales margins increasing $400,000 year over year to $22 million in the fourth quarter of 2016.

For the full year, Unitil posted 2016 net income of $27.1 million, or $1.94 per share, compared with $26.3 million, or $1.89 per share, in 2015. The 3% year-over-year increase was attributed to higher gas and electric sales margins and lower utility operating costs.