Friday, May 11, 2001 | 11:08 a.m.
Sierra Pacific Resources, the holding company of Nevada Power Co. and Sierra Pacific Power Co., today reported a massive loss for the quarter ending March 31.
Sierra Pacific reported a net loss of $83.5 million, or $1.06 per share. This compares to net income of $18.2 million, or 23 cents per share, for the year-ago quarter.
Sierra Pacific blamed the huge loss on "remaining impacts of the western power crisis," but suggested the company will return to a more solid financial footing with the Nevada Legislature's recent repeal of deregulation. Walt Higgins, chairman and chief executive of Sierra Pacific, called the loss "significant and profound evidence of just how serious the energy crisis is in the West and the threat it could have posed to Nevada.
"The actions by the governor, the Legislature and continued focus by our Public Utilities Commission on actions that ensure reliable energy supply can and will be a major factor in putting this dark chapter behind us and distinguishing Nevada as a favorable environment for needed energy investment," Higgins said. "With these solutions in place, we look forward to restoring earnings performance that reflects the true underlying strength of our operations in a growing market."
Soaring electricity costs, increased sales and customer growth caused Sierra Pacific revenues to surge ahead 88 percent to $738 million. Nevada Power posted $359 million in revenue, an 83 percent increase, while Sierra Pacific Power's revenue rose 95 percent to $376.3 million. However, a variety of factors more than offset these gains, the company said.
The key factor was Sierra Pacific's inability to adjust rates upward to keep up with soaring fuel and purchased power costs, the company said. However, the Legislature's action in April will allow Sierra Pacific to recover all of those increased costs on a deferred basis. Sierra Pacific also said it established reserves for losses on power sold to the California Power Exchange, which has since declared bankruptcy.
Other one-time charges recorded during the quarter included expenses related to Nevada's repeal of deregulation, which blocked the company's plans to sell off its power plants. Sierra Pacific also recorded charges from the termination of its plans to acquire Portland General Electric from Enron Corp. for $3.1 billion; the deal was officially called off in late April.
Sierra Pacific did not break out the one-time charges in the earnings release it issued this morning.
Sierra Pacific fell 26 cents this morning to $15.74.
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