Edison Posts a Profit of $2.2 Billion
Edison International on Friday reported a fourth-quarter profit of $2.2 billion, boosted by a massive one-time $2.1-billion gain linked to a pact with state regulators designed to save its utility subsidiary Southern California Edison from bankruptcy.
The pact allows Edison to maintain retail rates at current high levels, despite a recession-linked sharp decline in wholesale prices. In so doing, the utility should recover about $3.6 billion of past costs incurred buying power for its customers. That total translates to an after-tax gain of $2.1 billion.
A year ago, prevented from collecting those costs by a retail price freeze imposed under California’s deregulation legislation, it had been forced to take a charge of about $2.5 billion.
Edison said the pact with state regulators now makes “recovery of those costs probable.”
The Rosemead-based company reported a “core” fourth-quarter loss of $11 million, or 3 cents a share, excluding one-time items, compared with a loss of $37 million, or 11 cents, a year earlier.
The narrower fourth-quarter loss was mainly due to higher operating profit of $121 million, or 37 cents a share, earned by SCE, up from $30 million, or 9 cents, in the year-ago period.
The company’s Edison Mission Energy unit, an independent power producer, reported a quarterly loss from continuing operations of $97 million, or 30 cents a share, versus a loss of $46 million, or 14 cents a share, in the same quarter of 2000.
The latest quarter also included items such as a loss of $25 million, or 7 cents a share, at a new unit, Mission Energy Holding Co., which incurred interest expenses after issuing new debt as the company struggled to stay afloat.
Edison International Chief Financial Officer Ted Craver told analysts that the pact with regulators should allow SCE to clear its defaults and arrears with a total payment of $5.5billion to creditors scheduled for March 1.
Craver said the utility is in the process of raising bridge financing of about $1.6 billion to help pay the debt. J.P. Morgan Chase & Co. and Citibank are in the process of syndicating the financing, he added.
This will be combined with the utility’s cash on hand, which stood at $3.4 billion at the end of 2001 and is expected to total about $3.8billion by the end of February.
Craver said Moody’s Investors Service had given the bridge financing a provisional “Ba2” rating and Standard & Poor’s has rated it “BB.”
Both ratings are described as at the low end of medium-grade, or somewhat speculative.
Edison shares closed down 12 cents at $15.14 in trading on the New York Stock Exchange. Since October, the stock has gained about 16%, boosted by the pact with California regulators.
