Invested in Natural Gas
AGA’s new report on investor sentiment gives natural gas high marks
A new report commissioned by the American Gas Association and the Canadian Gas Association shows that investors continue to see natural gas utilities as a great investment.
Investor Expectations on North American Natural Gas Utilities, which is available on the AGA website, presents foundational background, analysis and learnings from qualitative interviews with members of the investment community. Featuring several quotes from these investors, the report provides unfettered insight into their considerations and motivations.
“This is the resource when it comes to investor expectations regarding natural gas utilities in North America,” John Gunnells, manager, state affairs with AGA, told American Gas.
The investor interviews sought to uncover any shifts in attributes toward gas utility investments and illuminate the decision-making trends with respect to investments in gas utilities.
Overall, investors reported feeling that natural gas utilities are stable, low-risk investments as long as they demonstrate a positive year-over-year rate base and customer growth.
Investors indicated that natural gas remains essential for energy security, since there are no other low-cost options available to replace it at scale. Furthermore, investors have a favorable view of gas utilities with diversification plans into cleaner fuels including renewable natural gas.
Investors also revealed that they consider factors including environmental policies, consistency in rate-making, climate and population growth when making investment decisions. Similarly, jurisdictions with regulatory support for decarbonization and transition that ensures the role of the gas network in the future are viewed more positively. Investors also expect utilities investing in cleaner fuels such as RNG to have higher returns on equity due to business and operational risks.
“Investors see natural gas as a critical piece of America’s energy infrastructure and are looking to continue to invest in that,” Gunnells said.