NV Energy's third-quarter earnings flat


Local power utility NV Energy reported stable earnings in the third quarter, and the company's executives said they remain committed to initiatives involving energy efficiency, renewable power and new transmission capacity.

The utility's net income came in at $182.7 million, or 78 cents per share, on revenue of $1.1 billion in the quarter that ended Sept. 30. That's even with the $182.6 million, or 78 cents per share, on $1.2 billion in revenue earned in the same period in 2009.

The income bested analysts' expectations, which Thomson Reuters pegged at 75 cents per share.

Quarterly operating expenses were $780.2 million, down from $877 million a year earlier, mostly because of lower purchased-power and fuel costs.

In a conference call to discuss the results with investors and analysts, Chief Financial Officer Dilek Samil said the company's electricity sales were flat year over year. To match its stable sales, NV Energy's operating and maintenance costs fell in the first nine months of 2010, dropping 2 percent when compared with the same period a year earlier, she said.

President and Chief Executive Officer Michael Yackira said he was "pleased" with the results.

"Our employees are doing a highly effective job at reducing costs and capital requirements. We're moving forward with business strategies to better serve our customers, and we're making excellent progress on NV Energy's major initiatives," Yackira said.

The company remains focused on its three-part operating plan, which includes boosting energy conservation, expanding investments in renewable power and building transmission lines and efficient fossil fuel-powered generating stations.

On the conservation side, Yackira pointed to the September launch of the utility's Advanced Service Delivery program, which it has renamed NV Energize. Through NV Energize, the company will replace its 1.4 million meters with digital meters that will let customers see their power use and bill to date at any point during the monthly consumption cycle. The idea? To offer rate options such as peak pricing, through which consumers would pay less for energy used during off hours. The move could encourage more ratepayers to use less power, thus reducing the need for new generating stations.

The Public Utilities Commission of Nevada would have to approve such pricing plans before NV Energy could offer them to ratepayers.

Through the fall, the utility will install 10,000 smart meters in Southern Nevada for a pilot program. Executives plan to have all the company's meters swapped out by the end of 2012. NV Energize will cost $300 million, $140 million of which will come from federal stimulus funds.

NV Energy officials have "carefully studied" smart-meter initiatives in other markets "to assure what we believe will be a smooth and thoughtful rollout in Nevada," Yackira said.

In some states, including California and Texas, smart meters caused backlashes after some consumers and regulators blamed them for rising invoices and billing inconsistencies.

"We are taking a step-by-step approach, including a painstaking customer-confidence plan, to help our customers understand the benefits and options NV Energize will provide," Yackira said.

Yackira added that when the Public Utilities Commission approved NV Energize in July, it was because the company sold the agency on operational savings of more than $35 million a year, and not because the utility expected to save on changing power-use patterns, which Yackira called "possible, but not quantifiable at this point."

As for NV Energy's renewable-power efforts, the company has more than 1,200 megawatts of green power either in production or under development (by way of comparison, NV Energy's canceled Ely Energy Center, planned as a coal-fired plant, would have brought 1,500 megawatts of power to the state's grid).

NV Energy's third operational prong -- new transmission and generation -- received a big boost a week ago, when the company, along with Senate Majority Leader Harry Reid, D-Nev., and U.S. Interior Secretary Ken Salazar, broke ground on the $500 million One Nevada transmission line, or ON Line. The 235-mile line will run from Apex to Ely, linking the company's northern and southern grids to each other and to renewable electricity generated in the state's rural areas. NV Energy is building and will own the line with Great Basin Transmission, an affiliate of New York transmission developer LS Power. It'll pay for its $130 million share of the project through investor equity and debt, while Great Basin will obtain federally backed loans to cover the rest of ON Line's construction price tag.

Yackira also took note of the utility's Public Utilities Commission filing last week seeking to recover expenses and lost revenue related to power-conservation efforts. Southern Nevada's share of the requested rate increase totals $106 million, or just under 5 percent. Yackira said he expects a decision in March, with any change in rates set to take effect April 1.

NV Energy's shares fell 9 cents, or 0.7 percent, Monday to close at $12.99 on the New York Stock Exchange.

Contact reporter Jennifer Robison at jrobison @reviewjournal.com or 702-380-4512.

 

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