Edison Turns Profit in 2nd Quarter
A year after its near-death experience during California’s energy crisis, Edison International reported sharply higher earnings Tuesday despite problems at its subsidiary that builds power plants.
The Rosemead-based company said performance improved at its Southern California Edison utility, which is collecting more in rates than it needs to serve its customers. Edison executives said the utility has repaid $2 billion of its electricity debts and has $1.6 billion to go.
Edison also benefited from a one-time positive adjustment of $480 million because a regulatory decision allowed the utility to place certain nuclear and other assets on its balance sheet that Edison was forced to write off last year. At that time, during the worst of the state’s energy woes, Edison doubted it would be able to recover its electricity debts through customer rates.
But the same low wholesale power costs that have helped Southern California Edison have hurt Edison Mission Energy, an unregulated unit that owns and operates power plants around the world.
“To say these were turbulent times in the industry is something of an understatement,” John E. Bryson, Edison’s chairman and chief executive, told analysts in a conference call.
Edison posted what it calls “core” earnings of $182 million, or 56 cents per share, for the quarter ended June 30, up 49% from year-ago core earnings of $122 million, or 37 cents.
Core earnings do not include one-time items--whether Edison’s write-downs of last year or the write-ups of this year--and earnings from discontinued operations. Analysts surveyed by Thomson First Call expected core earnings between 30 cents and 45 cents a share, with an average of 40 cents..
Edison’s consolidated second-quarter net income totaled $665 million, or $2.04, compared with a consolidated loss of $102 million, or 31 cents, for the same quarter last year. Revenue rose 19.6% to $2.9 billion.
Southern California Edison posted second-quarter core earnings of $215 million, up from $91 million. Edison Mission Energy reported less than $1 million in earnings from continuing operations compared with earnings of $41 million in the second quarter of last year. A third subsidiary, Edison Capital, earned $12 million, down from $24 million.
Edison International also boosted its estimate of earnings for the year to $1.65 to $1.75 a share, up from previous guidance of $1.50 to $1.60.
Edison’s stock rose $1.03 to close at $11.78 on the New York Stock Exchange.
Shares of PG&E; Corp. rose 33 cents to close at $8.63 after falling 51 cents Monday when Moody’s Investors Service lowered the credit rating of PG&E;’s power-plant-building and energy-trading unit to “junk” status. Standard & Poor’s cut the credit rating of PG&E;’s National Energy Group to junk last Thursday, forcing the company to begin renegotiating $1.6 billion in credit agreements with lenders who demanded an investment grade credit rating.
Moody’s action triggered another $1 billion in loans that could be called by creditors, but PG&E; said Monday that creditors had waived until Aug. 16 a clause that National Energy Group must maintain an investment grade rating. PG&E;, whose Pacific Gas & Electric Co. utility is operating under Bankruptcy Court protection, said it continues to negotiate with its creditors.
