Utility Earnings, Big-Time Infrastructure Spending In the Mix

By Published On: August 14, 2009

Despite a major gain by its utility, Edison International posted a loss this quarter. Sempra reported quarterly earnings somewhat down from last year. PG&E Corp.’s second quarter profits were almost $100 million higher than the second quarter 2008. While profits varied, all agreed on one thing--they intend to pursue capital expenditures totaling approximately over $31 billion on infrastructure development. Southern California Edison The utility’s parent company, Edison International, posted a $16 million loss for the second quarter, 2009. Last year for the same quarter, it posted $261 million in profits. That’s despite Southern California Edison reporting $499 million in income for the quarter, a significant increase from $157 million this time last year. The loss to the parent company was attributed to a tax settlement. A five-year plan to spend $20.4 billion on electricity infrastructure--including $900 million on solar projects--remains in play, according to the company’s presentation. That amount may increase. “We spend an enormous amount of time” thinking about how to achieve California’s 20 percent renewables portfolio goal, said Ron Litzinger, Edison Mission (an unregulated subsidiary) chief executive officer. The state may increase that mandate to a 33 percent renewable portfolio with current pending legislation. “Intermittent resources [like solar and wind] need backup supplies. We’re trying to get our minds around what those might be,” he added. Ted Craver, parent company chief executive officer, noted that the utility plans to file with state regulators an extension of indexes used to determine Edison’s return on equity--now up to 11.5 percent. “It provides stability and predictability for our customers.” That means that the current rate of return would be extended beyond its current sunset. Also providing “greater certainty and predictability” to the company is the potential national energy bill, known as the Waxman-Markey bill from the House. Edison International supports the language in the bill that would financially help traditional power producers ease into a new climate regime. Pacific Gas & Electric The utility’s parent corporation, PG&E Corp., reported quarterly income of $392 million. Last year for the same quarter, the corporation reported $297 million in net income. The utility reported a $387 million net profit for the quarter, compared to $309 million in the second quarter 2008. Utility management said that its three-year general rate case plan at the California Public Utilities Commission for $2.9 billion a year in capital should not be seriously impacted when analysts questioned whether the current California economic “malaise” would change the utility’s ability to continue at that level. The expenditures are aimed at shoring up old infrastructure and building advanced networks, such as its “smart meter” program. “By the time [the general rate case is decided] the economy will have turned around,” said PG&E president Chris Johns. He added that should be in 2011. “We’re sensitive to keeping an eye on that question.” PG&E filed its intent to carry out its triennial rate case July 20 in which it stated it intends to raise rates by 14 percent as well as pursuing the capital investments. Johns also noted that PG&E is attempting to settle a disagreement over energy efficiency payments at the CPUC. The settlement would begin in 2010 and be worth from $0-$30 million. Curiosity recently increased from privately owned renewable energy companies partnering with PG&E about getting their projects on line. The utility said it’s exploring those, as well as looking at the opportunity to build and own its own renewable generation, noted Johns. Sempra Sempra, the parent company of San Diego Gas & Electric and SoCal Gas reported second quarter earnings at $198 million, versus $244 million this time last year. The regulated utilities accounted for profits of $70 million (up from $61 million this time last year) and a $65 million net income (up from $56 million in the second quarter last year) respectively. Unregulated Sempra Generation posted $33 million for the quarter, up from $23 million this time last year. Sempra LNG continued losses with a negative $16 million for the quarter, slightly better than the loss the liquefied natural gas developer posted this time last year at a negative $22 million. San Diego utilities continue capital investment programs. The planned Sunrise Powerlink transmission project, a high-voltage line from the state’s eastern desert to urban San Diego, could cost SDG&E $1.9 billion before it comes into service in 2012. In “smart meter” plans for utilities, SDG&E expects to have 200,000 meters on customer sites in another year or two, while SoCal gas has its sights set on 6 million “smart” meters by 2016. The last cost reported by SDG&E was $572 million for the project. SoCal plans on spending $901 million, according to the company. Insurance companies settled for wildfire losses to homeowners for $740 million out of $1.3 billion in claims during the quarter.

Share this story

Not a member yet?

Subscribe Now