Utilities Pursue Own Power Plants, Transmission

By Published On: March 10, 2006

California’s utilities all posted profits for the last quarter of California’s utilities all posted profits for the last quarter of 2005, as well as for whole year. Their plans for the future, however, show few parallels. Southern California Edison is delving into transmission. Pacific Gas & Electric wants to build its own new power plants and is looking into acquiring other business. Sempra wants to buy a power plant that was supposed to be built by Calpine. built by Calpine. Edison – Edison International posted $272 million in net income for the final quarter of 2005, compared with $379 million in the same quarter a year earlier. For 2005, the parent company of in the same quarter a year earlier. For 2005, the parent company of Southern California Edison posted earnings of $1.1 billion, compared with $916 million for 2004. pared with $916 million for 2004. Of the total, the utility counted $153 million for the quarter, compared with the $315 million that Edison reaped the last quarter of 2004. For the year, the utility posted $725 million, compared with $915 million in 2004. Generation subsidiary Edison Mission showed a gain in the last quarter of the year of $143 million, compared with a loss at the same time a year earlier of $52 million. For the year, Edison Mission had $322 million in net gains, compared with a loss of $666 million in 2004. The utility will focus on strengthening transmission projects, according to officials. Executives told the financial industry March 7 that the Devers transmission line is “on track.” However, the line’s ownership is being disputed by the Los Angeles Department of Water & Power. The dispute between the public and private utilities is pending before the California Public Utilities Commission. Executives acknowledged that subsidiary Edison Mission intends to build new power plants in California. However, they would not say whether the company is participating in Pacific Gas & Electric’s request for new power plant proposals. PG&E – PG&E Corp., the utility’s parent company, declared net earnings of $180 million, compared with $871 million in the fourth quarter of 2004. Utility Pacific Gas & Electric’s earnings for the last quarter last year were $183 million, down from $191 million a year earlier. Executives told the financial community that PG&E could soon be buying up other companies, instead of being an acquisition target. “There’s a new recognition that the world has changed – are you going to be acquired or an acquirer?” stated executives. “We like regulated business,” Peter Darbee, chief executive officer, said. “While regulators can be very difficult, competitors can be tyrants,” he added. Darbee said in recent conversations that regulators feel there are merits in PG&E as an acquirer. He explained that consumer advocate The Utility Reform Network indicated a preference for California-controlled companies over having PG&E acquired in an out-of-state merger. Sempra – Sempra, the parent company of SoCal Gas and San Diego Gas & Electric, showed a fourth-quarter income of $355 million for 2005, compared with $346 million a year earlier. For the year, Sempra posted $920 million. In 2004, earnings were $895 million. SDG&E’s fourth-quarter income was $72 million, up from $68 million the previous year. For 2005, the utility posted $262 million. In 2004, earnings were $208 million. SoCal Gas had $48 million in income from the last quarter of 2005, compared with $58 million a year earlier. For the entire year, SoCal Gas marked $211 million, down from $232 million in 2004. Sempra LNG, which is developing a liquefied natural gas terminal in Baja California, declared a fourth-quarter loss of $10 million, compared with a loss of $8 million a year earlier. For the year 2005, Sempra LNG lost $25 million, compared with a loss of $8 million a year earlier. Sempra Generation, which is building the Palomar power plant, recorded a quarterly income of $61 million, up from $19 million in the fourth quarter of 2004. For the year, Sempra Gen had an income of $164 million. Last year, it posted $137 million. Officials said Palomar is expected to begin making money for the company when it is included in rates in the middle of the year. Along with Palomar, new generation is supposed to be augmented by the Otay Mesa plant. However, because the project is being built by Calpine – a company in bankruptcy protection – the fate of the power plant is in question. Sempra is in negotiations to buy the plant from Calpine (Circuit, Feb. 24, 2006). During the company’s financial conference with analysts, Sempra suffered power outages – the elevators weren’t working and the lights apparently were out, although the financial conference continued.

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