Year-over-year income for NV Energy down in third quarter
NV Energy’s earnings fell in the third quarter, as milder summer weather and completion of a big power plant ate into the electric utility’s income.
The company’s net income in the quarter that ended Sept. 30 was $173.5 million, or 73 cents a share, down from $177.5 million, or 75 cents a share, in the same quarter a year earlier. The third quarter, with its warm months from July through September, is typically the utility’s most profitable.
The company’s income beat analyst expectations, which Marketwatch pegged at 71 cents a share.
Quarterly revenue fell to $1 billion. That’s down from $1.1 billion in the same period a year earlier.
In a Wednesday conference call, NV Energy executives noted yearly customer growth of around 1 percent but also noted a 1 percent drop in power sales thanks to cooler summer weather in 2011. Cooling-degree days, which measure average temperatures and how those temperatures spur air-conditioning demand, fell 4 percent year over year in the quarter.
Completion of the 484-megawatt expansion of the Harry Allen plant cut the utility’s construction-carrying costs but boosted expenses for depreciation and operations and maintenance. The combination resulted in a $17 million drop in quarterly income, year over year.
Dilek Samil, NV Energy’s chief financial officer, treasurer and senior vice president, said Harry Allen will drag down earnings through year’s end, when the utility hopes to begin recovering costs and earning a return on the plant.
NV Energy has asked to recoup Harry Allen-related expenses in a general rate case before the Public Utilities Commission of Nevada.
The utility is seeking a revenue boost of $250 million a year, or 11.4 percent over its current $2.2 billion annual revenue base. If granted, the rate hike would increase the average monthly single-family residential bill in Southern Nevada from $140 to $147 on Jan. 1. The increase would also cover higher returns for investors and new personnel- and work-management systems.
NV Energy officials also took the pulse of the local economy based on sales patterns. Despite positive signs that include increased visitor volume, booming statewide exports thanks to gold mining and expectations of rising mining activity, NV Energy CEO Michael Yackira said the economy hasn’t yet turned around.
“We continue to believe (recovery) will be measured in years rather than months,” he said.
With little expectation for big sales growth, NV Energy is curbing operations and maintenance costs, Samil said. Such expenses dipped to $139 million in the quarter, down from $144 million, even with $23 million in added costs for energy-efficiency programs. The company has 2,781 employees, down from 2,919 workers a year ago, though employee counts and payroll are only two of several contributors to operations and maintenance costs.
Yackira said he was pleased with the utility’s overall results.
“In response to the economic issues in Nevada over the past few years, our employees have done a remarkable job of finding new, cost-effective ways to serve our customers and bring value to our shareholders,” Yackira said. “We remain focused on our cost discipline, and are identifying opportunities for reducing costs while ensuring that we continue to provide our customers with safe and reliable service.”
The company’s shares rose 21 cents, or 1.35 percent, Wednesday to close at $15.74 on the New York Stock Exchange.
