Power Merchants Mainly Post Income Increases

While the panoply of nonutility publicly traded power providers changes in California, their earnings, as a whole, are on the rise. Several companies, such as Duke and Dynegy, have dropped out of the state's power industry. Others, such as SunPower, have got a foothold. Meanwhile, some have fallen under the financial radar because they've been bought by private equity companies, such as Complete Power and LS Power. This quarter's earnings roundup includes: AES - The international company with a small stake in California power plant generation posted $169 million in net income for the second quarter, compared to $85 million for the same quarter last year. AES has most recently been in the news in California because its power plant in Huntington Beach is the subject of a proposed water desalination facility by Poseidon that would piggyback on its plant. In June, the Coastal Commission agreed to assess an appeal by the opponents of that desal plant. Calpine - The company currently under bankruptcy protection told the Securities & Exchange Commission August 10 that it expects to report an $818 million loss for the second quarter, compared to a $298 million loss at the same time last year. Constellation - Constellation is putting its California High Desert power plant up for sale. In its July 28 earnings report, the Baltimore, Maryland-based company said it is selling High Desert as part of its strategy to shed natural gas-fired power plants and focus on coal and nuclear power. "We have a gas fleet that's somewhat removed from our core strategic business," Mayo Shattuck, chair and chief executive officer, said. "It's worth more to a different group of owners than it is to us right now. We can deploy the capital to more productive uses," he added. The sale could be made by the end of the year, according to the company. For quarterly earnings, it reported $121.7 million in net income, compared to $93 million in the second quarter last year. The effort to merge the utility with FPL (see below) continues with the merger proxy filed at the Securities and Exchange Commission June 23. Among others, the Maryland Public Service Commission still has to approve the merger. FPL - The Florida company with wind, solar, and natural gas-fired power projects in California reported $238 million in income for the quarter, up from $203 million in the second quarter last year. FPL expects to add 1,500 MW of new wind projects in the next year. The company's merger with Constellation Energy has still not come to fruition. The merger, announced last year, has been stalled by regulators. The marriage needs to be approved by the Federal Energy Regulatory Commission, as well as the Nuclear Regulatory Commission, as FPL owns nuclear facilities. FERC pushed back its approval date to February 2007. Mirant - The company will be selling many of its gas-fired power plants but is going to hang on to the ones in California and may even build a new one for PG&E customers in the Pittsburg area. Mirant told financial analysts that it is selling 3,500 MW worth of its assets, but it's retaining 10,657 MW, including those in the Bay Area. Executives said the company is discussing building another unit at Pittsburg. "We are currently talking with PG&E. But we don't see this happening tomorrow morning," said an official. Mirant posted net earnings of $99 million for the second quarter. This time last year, the company lost $10 million. Mirant emerged from bankruptcy protection this past January. NRG Energy - NRG reported net income this past quarter of $229 million, compared with $47 million this time last year. Improved results "are largely attributable to the acquisition of Dynegy's 50 percent interest in West Coast Power," which closed at the end of March, according to the company. However, it noted that it has lower income from reliability-must-run contracts for Encina units 4 and 5. In addition, NRG said it is setting up a bankruptcy-remote special-purpose entity to repurchase stock. Standard & Poor's rating service responded that the move doesn't affect the company's rating. "NRG's announcement comes on the heels of a June declaration that it plans to develop 10,000 MW of new generation capacity over 10 years. These announcements underscore management's appetite for risk," noted S&P. The bankruptcy-remote entity would be initially funded with $166 million in cash and should be shielded from having to issue debt for the repurchases. During the quarter, NRG had been the target of an unsuccessful hostile takeover by Mirant (Circuit, June 16, 2006). The repurchase plan should allow the company to "be able to take maximum advantage of the significant undervaluation of our equity," stated Robert Flexon, NRG's chief financial officer. Reliant - The owner of about 4,000 MW of aging power plants in Southern California reported some gain after losses last quarter. Income was posted at $14 million for the quarter, compared to $98.7 million this time last year. However, losses for the first half of the year totaled $42 million. SunPower - The photovoltaic company's income was $5.4 million for the second quarter of the year, compared to a loss of $6.3 million in the second quarter of 2005. While the company appears to be more focused on business in Western Europe, particularly Germany, it remains interested in residential installation in North America. "Still the biggest actors and movers are California and New Jersey" in the U.S. for solar implementation, said Julie Blunden, SunPower vice-president, external affairs. Executives said that in North America, California is 80-85 percent of the company's market. SunPower is expanding its manufacturing capability by two-thirds to keep up with demands. The company has increased silicon supplies via contracts. Williams - Williams appears to have renewed faith in doing business in California. The company's primary transactions here have been tolling contracts. Williams, however, posted a loss for the quarter of $76 million, compared to a profit this time last year of $41.3 million. "I have estimated probably in 2008-09, you'll start to see contracts [in California] out as far as 2015," said Steve Malcolm, Williams chair and chief executive officer. He invoked current requests for proposals being discussed that go out to 2014 and 2020, noting that the state's power market "continues to strengthen."

Over 11K Stories!

| Independently Powered Energy News

Power Merchants Mainly Post Income Increases

vdharadmin

Related Posts

Utility Regulators to Approve PG&E’s $2B in Forecast Costs

PacifiCorp to Join ISO’s Proposed Expanded Day Ahead Market, Adding Regional Grid Momentum

Solar Developers Say Finding that Southeast Asia PV Panels Are Dumped Harms U.S. Solar Growth

SoCal Gas at Top, Calpine at Bottom of S&P 'Strongest'