The APA Group (ASX: APA) share price is up more than 3% after announcing an update regarding a regulator’s decision.
APA is a major energy infrastructure business with a national gas pipeline, other gas-related assets, electricity transmission, solar farms and wind farms.
Energy regulator decision
The energy ASX infrastructure share said in an announcement that the Australian Energy Regulator’s (AER) draft decision was released today after its review of the form of regulation to apply to the South West Queensland Pipeline (SWQP).
The draft decision by the regulator recommends that the SWQP “should not be subject to full price regulation and that the existing light regulation regime should remain in place.”
APA noted the AER decision is preliminary with further consultation and submissions to be received from APA and other stakeholders.
The AER will then consider those submissions before issuing a final decision setting out the future form of regulation that will apply.
If the final decision confirms the draft decision, the current light regulation regime will continue to apply to the SWQP.
APA said it will update the market “further as required” in line with its responsibilities related to disclosure obligations.
Management comments
The APA Group CEO and Managing Director Adam Watson said:
APA welcomes the AER’s draft decision to maintain the current form of regulation for the SWQP. This decision, if confirmed, creates confidence to make the necessary investment in our East Coast Gas Grid to support energy security for our customers and consumers. It will also help facilitate our nation’s ambition to deliver a reliable, affordable and lower emissions energy system.
Is the APA share price a buy?
It’s certainly not a business that’s rapidly growing, growth is relatively slow. Its revenue is largely linked to inflation and the addition of new energy assets to its portfolio.
APA has grown its distribution every year for around two decades and it’s expecting another slight increase in FY25.
I think this is a good ASX dividend share, with a distribution yield over 7%. But, I wouldn’t call it an opportunity that’s going to vastly outperform the ASX share market. For that goal, I’d be looking at ASX growth shares.
