Tuesday, Aug. 9, 2005 | 11:01 a.m.
Sierra Pacific Resources, parent company of Nevada Power Co. of Las Vegas, this morning reported second-quarter net income of $9.1 million, or 5 cents a share.
The results -- bolstered by rate increases approved by state regulators in 2004 and continued customer growth -- were up from a loss of $44.9 million, or 38 cents a share, in the same quarter a year ago.
Revenue for the quarter was $701 million, up from $677 million last year.
"The improved financial results for the second quarter indicate that we're making steady progress in obtaining our overriding goals: to increase shareholder value and to return the company to investment grade," Walter Higgins, chief executive of Sierra Pacific, said in a statement.
In a conference call this morning, Sierra Pacific Resources Chief Financial Officer Michael Yackira said that the improved earnings came "despite milder weather."
Also contributing to the improved results was the absence of a series of charges that dragged down the second-quarter 2004 results, including a $47 million charge resulting from Public Utilities Commission's move to disallow recovery of costs associated with Sierra Pacific Power Co. of Reno's Pinon Pine power plant.
At Nevada Power, net income for the second quarter reached $21 million, up from net income of $13.6 million reported a year ago.
The company, in its quarterly filing with the Securities and Exchange Commission and in its conference call, also pointed to the passage of the federal energy bill signed into law on Monday by President Bush. The bill contained an amendment that will move the lengthy legal battle with disgraced power trader Enron Corp. to the Federal Energy Regulatory Commission.
Enron has demanded $336 million in termination payments from the Nevada utilities for contracts signed 2000-01 Western energy crisis and later canceled. Enron had argued that the case should be heard in U.S. Bankruptcy Court, where it received a favorable ruling that was later set aside by an appeals court judge.
"The (energy bill) amendment grants FERC exclusive jurisdiction over the determination of whether any such payments are unjust, unreasonable or contrary to the public interest," Sierra Pacific Resources' filing said. "The utilities have not yet determined what impact the law will have on the status of the various ongoing legal proceedings at this time."
Higgins also outlined the company's activities in building and acquiring power plants. Nevada Power is completing construction of the Lenzie Generating Station it purchased partially built from Duke Energy last year. It also is buying the Silverhawk power plant from a subsidiary of Pinnacle West Capital Corp. of Phoenix.
The company also said it will build an 80-megawatt addition to its Harry Allen power plant complex and will continue to investigate a Southern Nevada coal-fired power plant. Also in the works are plans for a Northern Nevada power plant.
"The demand for Nevada is growing in both Northern and Southern Nevada," Higgins said, pointing out that during the hot stretch in July, Nevada Power set five all-time peak demand records in seven days.
Given the demand in July, Higgins also said that prospects for a profitable third quarter -- barring a drastic drop in demand -- look good. The third quarter, he said, is typically the company's most profitable period.
"On balance the quarter ought to be a good quarter for us in every way," he said, adding that July's temperatures would point to a "better than normal" performance.
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