Wall Street yesterday shrugged off the increasing expenses that Washington Gas is facing as the company deals with leaking pipelines in Prince George's County.
The stock of the utility's parent company, WGL Holdings Inc., closed slightly higher, in line with gains of other companies in the sector, despite rising cost estimates associated with the repairs. The stock closed at $33.62, up 16 cents, or about 0.5 percent.
During a brief conference call, the chairman and chief executive of WGL Holdings, James H. DeGraffenreidt Jr., estimated the company would spend $144 million to complete the repairs and said some additional expenses would be incurred to address the underlying cause.
Analysts said they expected the company would recover the costs through higher rates. They predicted the company's earnings per share would be reduced by about 10 cents next fiscal year because of the repairs.
Analysts praised the company's management of the problem. "They've done a great job in addressing the situation and its impact," said Daniel M. Fidell, an analyst at A.G. Edwards & Sons Inc.
The company said yesterday it can resolve the problems that have caused about 1,400 leaks by making technical changes to the gas flowing through the pipelines. Washington Gas blames the problem on the composition of liquefied natural gas it says is causing the seals to shrink, a conclusion disputed by the company that supplies the gas.
Another analyst, Yogeesh Wagle of Standard & Poor's Corp., said the repairs will reduce the company's cash flow, leaving less money to boost dividends or expand non-regulated businesses, including one that provides heating, ventilation and air-conditioning services.