Edison Reports a Loss Totaling $617.3 Million
Edison International, the owner of California’s second-largest utility, posted a first-quarter loss after taking a $661-million charge for buying power at surging prices it couldn’t pass on to customers, the Rosemead company told shareholders Monday.
The loss was $617.3 million, or $1.89 a share, contrasted with net income of $109.5 million, or 32 cents, a year earlier, the company said in Ontario at its annual meeting. Sales fell 9.6% to $2.46 billion in the quarter from $2.72 billion a year earlier.
Shareholders lined up to pepper Chief Executive John E. Bryson with questions and comments, most of which blasted state and federal regulators but some of which questioned the company’s decisions of the last year.
One angry shareholder said he saw his stake in the company fall from $210,000 last year to about $70,000 today and criticized the company for paying the high prices charged by generators in California’s deregulated electricity market.
“You gave us $4 billion worth of debt on our balance sheet,” the shareholder said to applause from many of the 600 people gathered in a hotel ballroom. “Why?”
Bryson said that based on previous instances in which the cost of power shot up because of high natural gas or oil prices, Edison assumed state regulators would step in and raise retail rates to allow the company to recover its costs.
“As a public utility, we are required to do that,” Bryson said, referring to Edison’s decision to buy expensive wholesale power. “You can’t just let the lights go out. The California Public Utilities Commission was obligated to cover our costs.”
Excluding the charge, Edison International had earnings of $43 million, or 13 cents a share, compared with $110 million, or 32 cents, in the same quarter last year. Its utility unit, Southern California Edison, reported earnings of $62 million, not counting the charge, compared with $113 million a year earlier.
“As expected, they took the big charge to reflect the losses from buying power,” said Barry Abramson, a utility analyst at UBS Warburg in New York. “It wouldn’t have been a good quarter, even without the charge, but they still would have been solidly positive.”
Edison’s board of directors voted to eliminate the second-quarter dividends on its common stock that would have been paid to shareholders July 31.
The board also voted to defer quarterly dividends on Southern California Edison’s preferred stock.
Edison Mission Energy, the company’s unregulated subsidiary that builds and operates power plants, had earnings of $8 million in the quarter, compared with a loss of $12 million in the 2000 period. Edison Capital, the unregulated subsidiary that invests in power projects, earned $12 million, compared with $38 million in the same period last year.
An $800-million credit line set to expire Monday was extended until Sept. 15, Bryson told shareholders, noting that lenders were reassured by Southern California Edison’s rescue agreement with Gov. Gray Davis. The deal, under which the utility would sell its transmission system to the state for $2.76 billion, faces strong opposition in the Legislature, where lawmakers are preparing alternatives to Davis’ plan.
Edison International shares rose 94 cents, or 9.2%, to close at $11.15 on the New York Stock Exchange. They have risen 25% since Thursday, after Davis signed a bill authorizing a $13.4-billion state bond issue to buy power as part of his plan to rescue Edison. The shares have fallen 42% in the last year.
Bloomberg News and Associated Press were used in compiling this report.
