Post-Bankruptcy Generators Post Earnings

By Published On: May 12, 2006

Lagging a week behind its investor-owned utility brethren in reporting income for the first quarter, Edison relayed solid earnings. Two nonutility generators, Mirant and NRG, posted increased earnings following bankruptcy. Another generator, Reliant, continued to report increased losses. AES’s earnings were way up for the quarter. Edison International – The parent company of Southern California Edison reported $258 million in earnings for the first quarter this year, compared to $201 million in the same quarter last year. The utility posted $121 million in income, compared to $131 million in the first quarter of 2005. Edison Mission Group, including the unregulated subsidiary that develops power plants, posted $73 million in earnings for the quarter, compared to $76 million at the same time last year. Edison Mission has plans to build two 500 MW peaking power plants in Southern California. It also announced a hydrogen-fueled plant with partner BP in Long Beach. In addition, the subsidiary has plans for “substantial wind investments beyond what’s been announced,” according to executives. Requests to Edison for details of new wind projects were not answered. Meanwhile, Edison is eliminating its Mission Energy Holding Company as an entity, said officials. According to the company, “this change has been made to reflect the integrated management of MEHC and Edison Capital.” The company’s “core” earnings were $56 million this quarter, compared to $40 million in the same quarter last year. As a result of earnings, Standard & Poor’s revised its outlook on Edison Mission from “stable” to “positive” May 11. The ratings agency noted that the company’s risk has stabilized. AES – The international company with a small stake in California power plant generation posted $351 million for the quarter, up from $124 million this time last year. Mirant – Mirant, which emerged from bankruptcy in January, reported $467 million in income for the first quarter this year, way up from $11 million in the same quarter of 2005. On May 4, Mirant filed a 90-day notice with the state that it plans to shut down Pittsburg unit 7 and Contra Cost unit 6. According to documents filed with the Securities and Exchange Commission this week, the company does not expect that the retirement of these units will have “a material impact on our results of operations or financial condition.” NRG – Another company that emerged from bankruptcy, this time in December 2003, NRG posted $26 million in income for the first quarter this year, compared to $23 million this time last year. The acquisition of Dynegy’s 50 percent interest in West Coast Power, now known as NRG West, was completed March 31. One of its power plants, the 335 MW El Segundo facility, does not have a reliability-must-run contract with the grid operator to provide base revenue. However, the company noted that beginning this month, it has a contract for El Segundo’s power, although the company refused to provide information on how much power the contract is for and to whom it is sent. NRG West owns seven more power plants in California. Although it cost $205 million for NRG to buy out Dynegy, the company is cash-rich. Its liquid assets are pegged at $1.9 billion. Company executives, however, did not say how they would use that cash, though they said that NRG will not be putting all its greenback eggs in the coal-fuel basket. “We don’t want to be the Calpine of coal,” said David Crane, president and chief executive officer, May 9. “Coal is in fashion now. Gas was in fashion three years ago.” He was referring to the California-based company’s reliance on a single fuel to fire most of its plants. When the price of gas became unstable, Calpine declared bankruptcy, and it is currently under Chapter 11 protection. “NRG Energy continues to report meaningful signs of operational progress,” reported financial analyst the Motley Fool. “It seems to have better-than-average prospects of producing some real cash flow in the coming years,” it said. Reliant – The owner of about 4,000 MW of aging power plants in Southern California reported another loss this quarter – $81 million. That’s compared to a loss of $54 million for the first quarter in 2005. The company still faces litigation from the 2000-01 energy crisis. That includes a criminal proceeding for alleged violation of the Commodities Exchange Act, wire fraud, and conspiracy. A trial could begin this year. Reliant is also tangled in a lawsuit by the Los Angeles Department of Water & Power that alleges it conspired to manipulate the price of natural gas. The case is pending in state superior court.

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