Sierra Pacific reports quarterly loss

Kevin Rademacher

Tuesday, May 11, 2004 | 11:01 a.m.

After losing more than $140 million in 2003, Sierra Pacific Resources, parent company of Nevada Power Co. of Las Vegas, reported a loss of $44.5 million, or 38 cents per share, for the first quarter of 2004.

The loss is wider than the $11.2 million, or 10 cents a share, reported for the same 2003 quarter. The company blamed the poor results on a series of one-time charges.

Revenue for the company was $588.5 million for the quarter, down from $602.8 million reported a year ago. On the positive side, operating expenses also decreased to $542.9 million, down from $556.3 million in the same 2003 quarter.

Walter Higgins, chief executive of Sierra Pacific Resources, said the company continues to work toward restoring its troubled credit rating and increasing shareholder value.

"Because of our financial challenges, it will take time to attain these objectives," he said. "We believe that in the long term, the business strategies we are pursuing will result in a financially healthy company."

Among the charges cited by the company were $26.6 million related to after-tax costs of parent company financing activities, goodwill and merger costs and a small write-off of disallowed deferred energy costs at Nevada Power.

The Nevada Power subsidiary posted a $15.4 million loss, slightly higher than the $15.2 million lost in the same quarter last year. The Las Vegas electric company reported first-quarter revenue of $326.5 million, off from $331.7 million a year ago.

Nevada Power has 1,800 employees in Southern Nevada and 702,771 customers.

Gross electric margin -- defined as revenue minus the cost of energy -- was $11.7 million, up 12.5 percent over the first quarter 2003. The company attributed the results to $6.5 million in increased transmission revenue as portions of its Centennial Plan system were placed into service. The company also gained $5.2 million in additional revenue because of customer growth.

Dragging down Nevada Power's revenue were $6.4 million in higher power plant maintenance costs because of scheduled work at the company's Clark Station and Reid Gardner power plants. The company also wrote off $4 million in disallowed costs related to the 1999 merger with Sierra Pacific Power Co. of Reno and paid $3.1 million in higher long-term debt interest costs.

Nevada Power -- which only generates about 40 percent of the electricity needed to serve its customers -- also saw purchased power costs increase 6.9 percent from $119.3 million in the first quarter of 2003 to $127.5 million for the same 2004 quarter. The company said the increase was due to higher demand and higher costs.