Dynegy Sees Higher Earnings Across the Board
Dynegy Inc. CEO Chuck Watson said last week he had "never been
so excited" about his company's fourth quarter and yearend
earnings, because across the board, every business segment of the
Houston-based company was up. Referring to California, Watson said
Dynegy had taken steps "months ago," in anticipation of today's
problems, and now was actively supporting planned changes there.
For 2000, Dynegy reported a 210% increase in its recurring net
income, up to $452 million, or $1.43 a diluted share, compared with
1999 recurring net income of $146 million, or $0.63 per share. The
2000 results represented a 157% increase over 1999 net income of
$176 million, or $0.53 per share. For the year, Dynegy's common
stock "leads the industry," said Watson, who reported that it had a
218% total shareholder return.
Watson, who called 2000 an "exceptional year," said Dynegy had
leveraged its assets and that its "core convergence segment
achieved particularly outstanding results, with a 252% increase in
2000 recurring net income to $355 million." The company's
competitive position was advanced with the Illinova merger and the
completion of three greenfield power plants totaling 1,055 MW.
"The closing of two acquisitions totaling more than 3,000 MW
during the first half of this year and the development of three
additional greenfield power projects totaling 1,165 MW by this
summer will ensure that our growth performance will continue into
2001 and beyond," said Watson.
The CEO waxed poetic about the company's future, saying he had
never been more enthusiastic about fourth quarter or year end
results than he was with the most recent numbers.
With less than 10% of its generation portfolio in California,
Watson said California was "not the focus of Dynegy," but added
that his company was "publicly committed" to solving the state's
energy problems. "Dynegy has been and will continue to be a player
in California," he said. Speaking to analysts during an earnings
conference call, Watson said everything that could go wrong with
California had gone wrong, but insisted the state was not in an
energy crisis, but rather a financial one.
Dynegy's COO Steve Bergstrom, who has led the company's
participation in California energy discussions, said, "for many
months, Dynegy tried to get into a discussion" with state officials
about price caps, because Dynegy recognized that problems were
"California's energy crisis is real and it was not caused by
deregulation," said Bergstrom. However, both he and Watson
acknowledged that there are "solutions to stop the bleeding" if
state officials recognize the problems are all financial, and are
not related to deregulation. Watson said the California governor
(Gray Davis) might not understand "Economics 101" but "he
understands Black Out."
Dynegy officials think there are several "must haves" for the
California market to remain viable: credit assurances for going
forward, securitization of past receivables owed, bilateral
contracts, a long-term rate structure and the removal of roadblocks
to build new generation.
"All of us in industry are trying to make it happen and we are
committed to making it happen," Watson said.
Carolyn Davis, Houston