2nd Quarter Profits Up for Edison, PG&E; Sempra Remains Hopeful

By Published On: August 15, 2008

Re-regulation, as well as big plans to spend money on infrastructure and new power plants, has been good to California utilities’ bottom line in the last fiscal quarter. All three electric utilities reported earnings well up from this time last year. Sempra–San Diego Gas & Electric’s and SoCal Gas’ parent company reported $244 million in income for the quarter, down from $277 million for the same quarter last year. However, that does not include the July 31 approval of a 12 percent rate hike for San Diego Gas & Electric and a similar increase for SoCal Gas, totaling $3 billion annually. The California Public Utilities Commission adopted a $1.3 billion revenue requirement for SDG&E for 2008 alone. For the gas company, regulators approved a $1.685 billion budget for this year. “There were strong results from California utilities,” said chief executive officer Don Felsinger. Sempra officials expect about a $42 million higher return due to the state’s general rate case approval in the next quarter. In mid-November, Sempra is expected to issue the final Environmental Impact Report (federal) and Environmental Impact Statement (state) for its long-running plan to build a transmission line from the desert to urban consumers, called Sunrise Powerlink, according to Debra Reed, Sempra utilities chief executive officer. She added that regulators would probably get their first attempt at approving it at the end of November. SDG&E’s income increased from $51 million in the same quarter last year to $61 million in the second quarter of 2008. SoCal Gas income for the last quarter was $56 million compared to $54 million this time last year. Sempra liquefied natural gas operations, which include a gas import terminal in Baja California, posted a loss of $28 million, compared to a loss of $13 million this time last year. Officials blamed the loss on Mexican income taxes. The company noted its intent to build a solar thermal plant in Nevada and bid into Southwest utilities’ portfolios. It said its initial investment would be about $40 million for 10 MW. Edison International–parent of Southern California Edison, reported $262 million in the last quarter versus $239 million this time in 2007. The utility is intent on “developing not just acquiring” new generation and other capital investments, according to Ted Craver, president and chief executive officer. The company realizes its current risk in its coal investments and is focusing on natural gas generation like its Walnut Creek peaking plant planned for the City of Industry. The 500 MW plant, however, may be affected by growing restrictions on air pollution credits. Corporate officials also noted an intense interest in wind energy. The corporation said it may consider independent wind transmission projects. PG&E Corp–Pacific Gas & Electric’s parent company reported net income of $293 million, up from $269 million this time last year. Of that, the utility posted $309 million for the quarter, up from $270 million this time last year. While the utility makes most of PG&E Corp.’s income, the parent company can post a loss due to its own operations. “We are seeking California Public Utilities Commission approval to invest $2.3 billion over the next six years,” said Peter Darbee, chair and chief executive officer. Part of that plan is to build a 1,120 MW fossil fuel plant, called Tesla, in eastern Alameda County. It is also building plants in Colusa and planning one in Eureka. Company officers expect to receive both rate base earnings, as well as incentives for energy efficiency. The corporation expects an 8 percent annual growth in earnings, according to officers. But, Darbee also noted, “We are working to prepare customers for the onset of higher energy costs and to provide them with the tools to help them achieve lower bills.”

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