SIERRA PACIFIC’S EARNINGS SURGE
Sierra Pacific Resources, the parent of Nevada’s major electric utility, on Tuesday said its first-quarter earnings skyrocketed 13 times higher than a year ago because of several unusual factors.
The utility company earned $15.6 million in the first quarter, or 7 cents per share, for the three months ended March 31, up from $1.2 million, or 1 cent per share, a year earlier.
Analysts polled by Reuters Estimates had expected earnings of 3 cents per share.
Revenue rose 7 percent to $765.4 million from $707.1 million.
The electric utility company attributed the increase to rate settlements related to a successful appeal of a rate case, recovery of power supply payments and lower interest rates on debt.
The company’s Nevada Power Co. subsidiary in March disclosed agreements to accept $190 million as full payment for a portion of a 2002 rate case decision that the Nevada Supreme Court overturned, including past interest charges on the expenses. That revenue increase will be charged to customers over 10 years without additional interest charges.
Also, as part of the deal, Nevada Power received $83.5 million for payments the utility made to wholesale suppliers who terminated contracts with the utility after the 2000-01 energy crisis. That sum plus interest will be paid through higher rates over three years.
Those factors, as well as continued customer growth, appeared to be already factored in the price of Sierra shares, which gained 3 cents or 0.19 percent to close at $18.30 on the New York Stock Exchange.
Nevada Power is expected to add 37,000 meters for new customers this year, compared to 44,000 in 2006. Over the 12 months ended in March, customer growth increased by 3.6 percent, down from 4.6 percent in the previous year.
Chairman and Chief Executive Officer Walt Higgins, however, told analysts that the real estate market looks healthy and blamed real estate speculation for home overbuilding and a temporary glut in housing units.
Las Vegas area population is climbing by 80,000 to 100,000 yearly. “The growth continues. There’s still a very robust population inflow,” Higgins said.
Nevada Power reported net income of $4.6 million, reversing a loss of $3.3 million a year ago. Operating revenues grew by 9.7 percent to $418 million.
Sierra Pacific Power Co., the subsidiary that sells power and natural gas to Northern Nevada customers, reported first-quarter net income of $21.9 million, up from $12.3 million. Operating revenue increased 3.8 percent to $338 million.
The company predicted Sierra Pacific Power would add 9,000 meters for new customers this year, compared to 9,950 a year ago.
Higgins told analysts that Nevada’s electric utilities will be getting a larger percentage of their power from solar resources than any other utility in the country by year end. Nevada Solar One, a 64-megawatt solar thermal plant at Boulder City, will begin operation this month. A 15-megawatt photo-voltaic plant that converts sunlight directly into electricity is scheduled to start operating by year’s end at Nellis Air Force Base.
The electric utilities contracted to buy energy credits from the Air Force plant and to buy power from the Boulder City solar thermal plant, but Higgins said the company plans to develop its own renewable power plants, possibly with partners.
