Results in natural gas gathering and commercial sales businesses produced a strong quarter for CenterPoint Energy, which reported net income of $136 million (39 cents/share) for 3Q2008, up from $91 million (27 cents/share) in 3Q2007.
The Houston-based power company, which saw power knocked out to 90% of its customers when Hurricane Ike roared into the Gulf of Mexico region in September, said it expects diluted earnings for 2008 to be in the range of $1.25-1.35/share, up from its previous guidance of $1.15-1.25/share. CenterPoint's board recently declared a regular quarterly cash dividend of 18.25 cents/share.
"We continue to see the benefits of our balanced electric and natural gas portfolio," said CEO David M. McClanahan. "Strong results in our field services and competitive natural gas businesses helped offset the loss of revenue from Hurricane Ike."
While CenterPoint had eliminated virtually all Ike-related outages by Oct. 1, the utility continues to deal with the storm restoration effort -- and a plan to pay for it.
"Some work is ongoing to replace temporary repairs that we made in order to restore power as quickly as possible, but we expect to have our system returned to its pre-Ike condition soon," McClanahan said during a conference call with financial analysts last Wednesday. "We have estimated that the total cost for this storm restoration effort will be in the range of $650-750 million. These costs are being deferred for future recovery and therefore do not affect our third quarter earnings."
CenterPoint will seek enabling legislation, similar to that which was passed in 2006 following Hurricane Rita, when the Texas legislature convenes in January, according to CFO Gary Whitlock.
"Such legislation would allow us to issue storm cost recovery securitization bonds...and would require the Texas Public Utilities Commission to review our costs and issue a financing order," Whitlock said. "These bonds would have the dual benefit of allowing us to recover our Ike costs in a timely fashion while lowering the ultimate cost to our customers. We believe that this securitization method of recovery has the support of state and local officials and our public utility commission. Assuming early passage of storm cost securitization legislation, we hope to be able to complete the regulatory process and issue bonds by next summer."
CenterPoint's natural gas distribution segment reported an operating loss of $6 million for 3Q2008 compared to a loss of $8 million for the same period of 2007. The segment benefited from new rates implemented in late 2007 and the addition of nearly 26,000 metered customers since September 2007. The utility's interstate pipelines segment reported operating income of $55 million for 3Q2008 compared to $70 million in 3Q2007.
The field services segment reported operating income of $44 million for 3Q2008 compared to $26 million in 3Q2007. The increase was due primarily to higher throughput, increased ancillary services and a gain of $7 million associated with system imbalances. CenterPoint's competitive natural gas sales and services segment reported operating income of $35 million for 3Q2008, including approximately $7 million from favorable locational and seasonal price differentials.
The electric transmission and distribution segment reported operating income of $202 million for 3Q2008, including $169 million from the regulated electric transmission and distribution utility operations (TDU) and $33 million related to transition bonds. Operating income for 3Q2007 was $196 million, consisting of $155 million from the TDU, $30 million related to transition bonds and $11 million from a competition transition charge, which was discontinued in February.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.