Edison’s profit nearly triples to $261 million
Lower utility taxes and higher earnings at its Midwest power plants helped Edison International’s profit nearly triple in the second quarter, the Rosemead company said Friday.
Edison International’s net income totaled $261 million, or 79 cents a share, up from $93 million, or 28 cents, for the year-earlier quarter, when interest expenses at the company’s power plant business lowered the company’s earnings by 45 cents a share.
Revenue jumped 11% to $3.38 billion.
Analysts were expecting quarterly profit of 75 cents a share, on average, according to a survey by Thomson Reuters.
Edison, which owns utility Southern California Edison, reiterated its expectation that full-year earnings would hit the high end of its earlier guidance of $3.61 to $4.01 a share. That estimate excludes several items that could change those numbers.
The biggest of those is a pending settlement with the Internal Revenue Service over $1.6 billion in disputed taxes involving complex lease arrangements made by one of the company’s unregulated subsidiaries.
Edison said negotiations with the IRS could produce a $650-million charge in 2008 but ultimately would put the company’s net cost at around $625 million. Standard & Poor’s rating service said Friday that the settlement would be material but wouldn’t affect the parent company’s debt ratings.
Edison’s estimate also excludes a possible impairment charge of as much as $48 million for the purchase of required pollution allowances at Edison Mission Group. That unregulated subsidiary includes Edison Capital, which invests in energy and infrastructure projects, as well as businesses that own and operate coal and other power plants, sell electricity into competitive markets and trade energy commodities.
Edison Mission Group posted a profit of $112 million, or 34 cents a share, for the three months that ended June 30, contrasted with a loss of $49 million, or 15 cents, last year. The group got its biggest boost from higher selling prices for power produced in the Midwest, which contributed 10 cents a share.
Southern California Edison, which provides electricity to 4.8 million homes and businesses, had second-quarter earnings totaling $157 million, or 48 cents a share, a 9% increase from $144 million, or 44 cents, last year.
Edison President Theodore Craver Jr., who added the chief executive title a week ago, said the company’s future success “boils down to being able to realize our substantial growth potential.”
At the utility, Edison expects a 11.5% return on equity and full-year results that would include 8 cents a share in bonuses tied to exceeding energy efficiency goals set by California regulators. The company also has proposed rate hikes for 2009, 2010 and 2011.
In a call with analysts, Craver paid homage to John Bryson, who retired at the end of July as the company’s longtime CEO and chairman. Craver also highlighted other recent management changes.
Robert Adler, a co-managing partner at Munger, Tolles & Olsen in Los Angeles, became Edison’s general counsel and an executive vice president July 1, replacing the retiring J.A. Bouknight Jr. Jim Scilacci, who was chief financial officer at Edison Mission Group, was promoted to executive vice president, chief financial officer and treasurer of the parent company earlier this month. He replaced Thomas McDaniel, who retired.
Edison shares rose 23 cents Friday to $46.68.