Nevada Power’s parent turns quarterly profit

Kevin Rademacher

Monday, March 7, 2005 | 10:54 a.m.

Beneficial regulatory decisions and a productive legal maneuver in its ongoing battle with Enron Corp. helped Sierra Pacific Resources to a fourth-quarter and full-year 2004 profit.

The parent company of Las Vegas-based Nevada Power Co. and Sierra Pacific Power Co. of Reno this morning reported a fourth-quarter net income of $27.3 million, or 15 cents a share. That's compared with a loss of $19.8 million, or 17 cents a share, for the same 2003 quarter.

Revenue for the fourth quarter was $654 million, up from $614 million for the year-ago quarter.

For the full year 2004, Sierra Pacific Resources reported a net income of $28.6 million, or 16 cents a share, compared with a 2003 loss of $140.5 million, or $1.21 a share.

The results mark the first full-year profit since 2001.

"I can say we are very pleased with the results we achieved in 2004," Walter Higgins, chief executive of Sierra Pacific Resources, said in a conference call today, adding that the company was "poised to maintain the positive momentum."

Shares of Sierra Pacific Resources surged 2.7 percent on the news this morning, trading at $10.26 a share, up 27 cents.

Boosting the quarterly results was a $94 million margin increase generated from continued customer growth and general rate increases approved last year by the state Public Utilities Commission, said Michael Yackira, chief financial officer of the company.

Additionally, the company benefited from an appellate court reversal of a $40 million interest charge assessed in 2003 as part of the company's ongoing legal battle with Enron Corp.

Dragging down numbers were $11.7 million in expenses that the PUC refused to allow the utilities to recover from customers, $23.7 million in costs associated with the early payoff of debt and a charge of $47.1 million resulting from the PUC's disallowance of costs associated with the Pinion Pine power plant in Northern Nevada.

At Nevada Power, which has about 1,800 employees and 739,786 customers, fourth-quarter net income was $19.9 million, compared with loss of $5.8 million for the year-ago quarter.

Revenue for Nevada Power was $374 million in the fourth quarter, up from $359 million a year ago.

For the year, Nevada Power added a record 46,549 new meters, and similar records were set in Northern Nevada, Higgins told analysts this morning.

"We are beginning to recognize results that ought to be expected from a well-run utility in a high-growth region," Higgins said.

Yackira said the company expects statewide construction costs for the utility to reach about $800 million, including $362 million to complete the Lenzie Generating Station north of Las Vegas. Construction costs on that plant are running about $5 million less than original estimates, he added.

The company emphasized that the plant is expected to be online ahead of schedule and under budget.

In contrast to some of the heated conference calls the company has held in recent years, analysts posed just three questions for Sierra executives, inquiring about growth, construction costs and the Enron feud.

The brevity and tone of the call were not lost on Higgins.

"I hope there are many, many, many future phone calls in which there are only three questions," he told the listeners.