Study Finds Investors Increasingly See Value in Natural Gas Utility Investments
Washington – Investor sentiment towards North American natural gas utilities has risen in recent years, according to a new study performed by MCR Performance Solutions (MCR) for the American Gas Association (AGA) and the Canadian Gas Association (CGA). The study, Investor Perspectives on Natural Gas Utilities: A Canadian and United States Review, found that investors view natural gas utilities as attractive investments for maintaining stability in their portfolios while supplying a reliable and predictable return on equity (ROE). Additionally, investors view the perceived regulatory risk embedded in natural gas utility-allowed ROEs as having decreased in recent years.
“Investors choose to invest in utilities because they provide a stable revenue stream accompanied by the low-risk level inherent to the business,” said AGA Managing Director of Energy Analysis Juan Alvarado. “Over the past two years, investors increasingly recognize the value of natural gas and related infrastructure to provide affordability, resilience, and energy security for decades to come.”
The investment community widely believes that natural gas stands firm as a vital foundation fuel underpinning the North American economy now and in the future. Increasing energy demand driven by the manufacturing renaissance and the boom of AI data centers has supercharged the need for the low-cost, lower-emissions dispatchable energy that natural gas provides.
“Investing in utilities is a wise choice, offering investors secure opportunities for long-term growth and dependable returns,” said Paul Cheliak, CGA Vice President of Strategy and Delivery. “As Canada’s population grows, with its diverse geography, unique climate needs, and abundant natural gas supply, natural gas infrastructure will continue to deliver reliable, affordable, and sustainable gas energy today and in the future.”
Higher interest rates and bond yields have made investors more optimistic about increased allowable ROEs to help ensure that natural gas utilities can continue to attract the necessary investments.
Notably, every investor respondent in the study foresees an ongoing role for natural gas for at least decades or longer. The long-term stability of the natural gas utility industry and its revenue allows investors to maintain a desirable level of risk in portfolios anchored by predictable and reliable investments.
Further Context on Study Methodology:
- MCR targeted investors, analysts, and members of utility management for interviews with a 60% response rate.
- Study participants are anonymous to help ensure engagement and access.
- Interviews focused on six broad topics: regulatory matters, policy issues, the macroeconomic picture, capital market positioning, company-specific and stock selection questions, and strategic issues.