The median interstate gas pipeline reported a slight pullback in its net plant in 2023 compared to 2022, which could be an early indicator of a future reduction in revenue.
What’s the issue?
The median interstate gas pipeline reported a slight pullback in their net plant in 2023 as compared to 2022.
Why does it matter?
Because a pipeline’s earnings are based on the amount of capital it has deployed, a reduction in a pipeline’s net plant may be a leading indicator of a future reduction in revenue.
What’s our view?
Therefore, if the reduction in net plant continues, there could be a future reduction in the industry’s earnings in coming years, if the investment in new assets is not enough to offset the depreciation of the existing assets.
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