Nevada Power owner posts 4Q loss

Monday, Feb. 10, 2003 | 10:57 a.m.

Mild weather and the lingering effects of the Public Utilities Commission of Nevada's disallowance of a rate increase last year resulted in a fourth-quarter loss for Sierra Pacific Resources Inc., the company said today.

Sierra Pacific Resources, parent of Nevada Power Co. of Las Vegas, reported a loss of $39.5 million, 39 cents a share, on revenue of $630.8 million for the quarter ended Dec. 31. For the same period a year earlier, the company reported net income of $5.8 million, 6 cents a share, on revenue of $733 million.

The Reno-based company, which also has a subsidiary that produces electricity and supplies natural gas in Northern Nevada and a small portion of California near Lake Tahoe, said Nevada Power's fourth-quarter loss was $19 million compared with net income of $6.9 million for the comparable quarter in 2001.

Sierra Pacific Resources' stock price was down 10 cents a share to $4.50 in midmorning trading today.

Warm weather resulted in lower revenue for the company, but Sierra Pacific Resources Chief Executive Officer Walt Higgins said today that unfavorable decisions in the PUC's deferred energy rate case earlier in 2002 resulted in higher interest expenses and other charges for the company.

Higgins said the company has spent much of the year regaining its financial footing after regulators did not allow recovery of $434.1 million in deferred energy costs for Nevada Power and $57 million for its Northern Nevada subsidiary, Sierra Pacific Power.

"While the past year was extremely difficult due to extraordinary events, we are focusing our efforts on strengthening the company's balance sheet and liquidity with several initiatives, some of which we recently announced," Higgins said this morning in a conference call. "Our No. 1 priority continues to be restoring the company's financial health."

Higgins outlined several measures the company has undertaken to improve the company's financial condition, including a continued freeze on hiring except to replace key personnel; the "painful decision" to eliminate the company's dividend; delayed payments to some suppliers and the refinancing of debt or conversion of debt into equity.

Last week Sierra Pacific Resources said that it had reached agreements to exchange 30 percent of its mandatorily convertible securities for common stock, reducing the company's outstanding debt by about $105 million and its future interest expense by about $26 million through 2005.

He also said the company is continuing to monitor several court and regulatory cases that could affect Sierra Pacific's finances. The company's complaint about the alleged manipulation of power markets by large utilities in the West is being reviewed by the Federal Energy Regulatory Commission.

Higgins also said arguments in the company's appeal of the PUC's decision on the deferred energy rate case would be heard in District Court in March. He said an $81 million deferred energy rate decrease filed with the PUC last year would begin March 31 with a decision expected by mid-May.