| Independently Powered Energy News

Higher power prices and peak summer demand boosted third quarter earnings for most California power generation owners, particularly those with diversified portfolios. Energy executives complained that demand has outpaced declining capacity reserves. They blamed prohibitively high construction costs of new power plants nationwide--especially in California. AES: The Virginia-based global energy company recorded $103 million in earnings for third quarter 2007 compared to a net loss of $327 million for the same period last year. Higher energy prices in North America, sales from AES’ two Mexican power plants TEG and TEP, and favorable foreign currency rates contributed to AES’ quarterly revenue gains. AES plans to construct a 300 MW simple-cycle natural gas-fired plant in San Bernardino County to supplement its Huntington Beach power plant in the California market. AES also is planning a 170 MW expansion of its Buffalo Gap wind farm in Texas, increasing its capacity to 524 MW to become one of the largest operating wind farms in the country. Calpine: The San Jose-based independent generator reported third quarter 2007 net income of $3.8 billion compared to $2 million in the third quarter 2006. The huge increase was due to “actions related to bankruptcy” reorganization, according to a spokesperson. Calpine announced November 12 that it reached claims settlements with two of its principal debt holders. Calpine said it would seek approval of these agreements by the U.S. Bankruptcy Court for the Southern District of New York on November 27. Dynegy: The Houston-based energy company posted $220 million in net income for the third quarter compared to a $69 million net loss for the third quarter 2006. Dynegy’s strong third quarter 2007 showing included earnings from the assets of LS Power, which the company acquired in April. Dynegy returned to California last year buying a 50 percent interest in LS Power last year. Dynegy officials attributed the company’s strong performance to its diversified portfolio. “The increased scale and scope of our generation portfolio resulted in significantly greater power generation sales volumes in all of our regions,” said Bruce Williamson, Dynegy’s chairman and chief executive officer. Evergreen Solar: The Massachusetts-based “string ribbon” solar manufacturer performed better in the third quarter than the second quarter this year. Evergreen reported a net loss of $3.7 million for the third quarter 2007 compared to a net loss of $5.6 million in the third quarter of 2006 and a net loss of $7.5 million in second quarter 2007. Evergreen shipped its first EverQ solar panels late in the second quarter and is expected to reach full capacity by the end of 2007. FPL Group: The Florida-based energy company reported a modest gain in third quarter earnings of $533 million compared to $527 million in third quarter 2006. FPL’s adjusted third quarter earnings were $493 million compared to $460 million for the same period last year. “FPL Group’s growth profile for 2008 and beyond is extremely bright,” boasted Lew Hay, company chair and chief executive officer. Hay forecast that the earnings would grow at least 10 percent a year to 2012. FPL’s earnings were driven by FPL Energy, the company’s competitive energy subsidiary, which owns wind, solar, and natural gas-fired generation in California. FPL Energy posted $220 million of net income for the third quarter compared to $218 million in the third quarter last year. Adjusted third quarter earnings were $180 million compared to $144 million in the third quarter in 2006. FPL Energy’s growth resulted from increased earnings at both its existing merchant plants and new generation assets, along with the company’s highly profitable wholesale marketing activities. FPL Energy expects to add more than 1,000 MW of new wind energy projects to its portfolio this year and a total of 8,000 to 10,000 MW of new wind projects from 2007 to 2012. The company also is expanding its nuclear and solar generation. Mirant: The Atlanta-based energy wholesaler has emerged from under the cloud of bankruptcy and a takeover threat from TXU with solid earnings. Mirant posted net income of $775 million for the third quarter 2007 compared to a net loss of $26 million in the third quarter 2006. Mirant’s third quarter earnings include revenues from the sale of six natural gas-fired power plants in the United States, as well as its Philippine and Caribbean businesses. The company, which generates much of its portfolio from coal, also has profited from rising electricity prices, which reflect declining capacity reserves to meet rising demand, said Ed Muller, Mirant’s chairman and chief executive officer Mirant’s strong third quarter earnings and its decision not to put itself up for sale prompted Fitch Ratings to remove the company from its negative credit rating watch list. Instead, Mirant plans to return $4.6 billion to shareholders in installments, beginning with buying back $2 billion of common shares. Mirant is looking at adding new capacity to its California power plants to meet rising demand and provide power to Pacific Gas & Electric and other wholesale customers, Muller said. Mirant plans to respond when PG&E issues its request for offers, Muller said. NRG Energy: NRG’s power plant repowering projects, including its Long Beach power plant, impacted the company’s short-term bottom line. NRG’s third quarter earnings dipped to $268 million, compared to $371 million for the same period last year, in part due to $49 million in development costs for its “RepoweringNRG” program. New contracts for fuel supplies at Encina and Long Beach improved NRG’s earnings in the West over the second quarter 2007, with the Long Beach Generating Station contributing $5 million in capacity revenues. NRG, which acquired several aging fossil-fueled power plants from Southern California Edison a decade ago, reported that its Southern California generating assets escaped unharmed from last month’s devastating wildfires and helped supply power to beleaguered San Diego County. Pacific Ethanol: Despite increased sales, the company reported a $4.8 million net loss for the third quarter of 2007 compared to net income of $3.8 million for the same period last year due to declining profit margins. Pacific Ethanol, which claims to be the largest ethanol producer on the West Coast, reported net sales of $118.1 million for 50 million gallons of ethanol in the third quarter 2007, nearly double its $61.1 million on sales of 27.3 million gallons of ethanol in the third quarter 2006. At the same time, Pacific Ethanol’s average price for ethanol sold fell to $2.11 per gallon from an average sales price of $2.46 per gallon in the third quarter of 2006. As a result the company’s gross profit margin fell to just 4 percent for the third quarter of this year compared to 12.2 percent for the same period in 2006. Pacific Ethanol opened a production plant in Madera last summer and plans to open another one at the Port of Stockton. The company wants to branch out to produce cellulosic ethanol and biodiesel. Pacific Ethanol’s president and chief executive officer, Neil Koehler, conceded that the company was disappointed with its net quarterly loss but stressed that it had achieved record sales of ethanol. “We are growing our market share in an industry that is experiencing dynamic growth,” he said. “As the cost of oil rises toward $100 a barrel, the importance of ethanol in the transportation fuel supply has never been greater.” Reliant Energy: The Texas generator’s profits continued to decline, posting $443 million in earnings for the third quarter of 2007 compared to $461 million for the same period last year. Improved wholesale sales during the quarter were more than offset by lower retail sales. Reliant president and chief executive officer Mark Jacobs, nonetheless, expressed optimism that improved market conditions balancing supply and demand will help the company achieve greater profitability and cash flow. SunPower: San Jose-based photovoltaic producer, SunPower, reported net income for the quarter at $8.4 million, compared to $9.5 million last year at this time. The manufacturer is counting on producing thinner silicon wafers, as well as the current tight market in silicon to ease up in 2008, to allow for higher production. It added it has power purchase agreements with AC Transit in the East Bay area, Agilent Technologies, a Silicon Valley company, the San Jose Tech Museum of Innovation, and 28 systems on Macy’s department stores. VeraSun: This South Dakota ethanol producer, which ships much of its product to California, posted third quarter net income of $7.8 million compared with a net of $32 million for the third quarter last year due to rising production costs and lower prices, even as sales and revenues surged. VeraSun sold 95.1 million gallons of ethanol in the third quarter, a 71.8 percent increase from third quarter 2006. VeraSun’s net sales from ethanol increased $58 million to $188.5 million in the third quarter of 2007 from $130.5 million for the third quarter last year. As a result, the company’s third quarter 2007 revenues increased nearly 50 percent to $221.9 million from a year earlier. VeraSun also produced 43.4 million more gallons of ethanol in third quarter 2007 than a year earlier. The increase in sales volume, however, was offset by a lower price of ethanol at the pump, which averaged $1.96 per gallon in the third quarter compared to an average of $2.36 per gallon in the third quarter 2006. “VeraSun had a solid third quarter in 2007 considering the change in market conditions for ethanol,” said Donald Endres, the company’s chairman and chief executive officer. “We continue to execute on our strategy to be a large-scale, low-cost producer.” The company is optimistic that demand for ethanol will increase as discretionary blending expands throughout the country, Endres said. Williams Energy: The Tulsa-based company profited handsomely from its core natural gas ventures, nearly doubling its third quarter earnings to $198 million over its third quarter 2006 net income of $106.2 million. Williams attributed its earnings boost to strong growth in gas production, historically high prices for natural gas liquid, and new rates on two gas pipelines. Williams provides fuel to several California power plants through tolling agreements. “Williams’ natural gas businesses continue to perform at exceptional levels, highlighted by strong growth in earnings,” stated Steve Malcolm, chair, president and chief executive officer. “As a result of our transportation agreements and hedges, 93 percent of our domestic production during the quarter was not exposed to the low Rockies pricing,” Malcolm added.

No Result