NV Energy reports earnings decline for fourth quarter

It wasn’t the best earnings quarter or year for local power utility NV Energy, but company officials said Tuesday they’ve turned the toughest corners and stable years lie ahead.

In the quarter that ended Dec. 31, the company lost $25.2 million, or 11 cents a share, compared with net income of $14.2 million, or 6 cents a share, in the fourth quarter of 2010. Quarterly revenue fell to $609.6 million, down from $655 million in the same period a year earlier.

The results fell short of analyst expectations, which Thomson Reuters pegged at a profit of 4 cents a share on revenue of $650 million.

For 2011, NV Energy reported net income of $163.4 million, or 69 cents per share, compared with net income of $227 million, or 96 cents a share, in 2010. Revenue dipped from $3.3 billion in 2010 to $2.9 billion in 2011.

The 484-megawatt expansion of the company’s Harry Allen plant in Apex proved the biggest drag on earnings. Once the station came online in May, the utility’s allowance for funds used during construction went away, depreciation kicked in and operating and maintenance expenses rose. The plant cut 5 cents per share from quarterly income and 12 cents from annual earnings, Dilek Samil, the company’s chief financial officer, said in a Tuesday conference call.

Planned maintenance outages at several NV Energy plants also hurt income, curbing fourth-quarter earnings per share by 3 cents.

Revenue slipped as slightly milder weather and the effects of conservation programs offset the boost from customer growth of just under 1 percent, Samil said.

CEO Michael Yackira said he was disappointed with the utility’s results, but added the company had expected 2011 “would not be a particularly good year,” mostly because costs of an operational Harry Allen plant wouldn’t be recovered in rates before year’s end.

Still, as it absorbed Harry Allen’s costs, NV Energy kept operations and maintenance expenses flat, Yackira noted. He said executives expect to do the same in 2012, with cost control as a priority for the year.

Plus, the Public Utilities Commission of Nevada approved a 2.7 percent across-the-board rate increase effective Jan. 1 that will allow NV Energy to recoup the costs of Harry Allen.

With the generating station’s completion, the utility has finished delivering on its strategy to boost generating capacity it owns and to reduce ratepayers’ exposure to volatile purchased-power markets, Yackira added. And the slowdown in Nevada’s growth means company executives don’t foresee a need for new generation until much later in the decade. That could mean smaller rate requests going forward and also free the utility from the kind of rate-recovery delays associated with Harry Allen in 2011, Samil said.

“With new rates in place, our financial condition set to strengthen, declining capital expenditures and no major projects on the horizon, I believe we’re entering a period of reduced regulatory risk,” Samil said. “For the time being, we’re not facing the rapid load growth or need for new generation that makes large rate increases necessary. The next several years should be quite different from the past decade, when our earnings trajectory was strongly linked to rate relief.”

NV Energy’s shares fell 37 cents, or 2.28 percent, Tuesday to close at $15.85 on the New York Stock Exchange.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.