NU Earnings Fall Short After Special Charges
Consolidated Edison's reservations about a merger with Northeast Utilities (NU) seem a bit clearer now following NU's latest financial report of a 29% drop in first quarter earnings. The New England combination utility company's results came in well short of Wall Street expectations. After non-recurring charges, NU earnings were $53.2 million, or $0.36 per share, compared with $74.6 million, or $0.55 per share, for the same period in 2000.
Before the cumulative effect of an accounting change and several nonrecurring charges, NU earnings were $134.6 million, or $0.93 per share. An accounting change related to the adoption of SFAS-133 (Accounting for Derivative Instruments and Hedging Activities), forced a $22.4 million charge. NU also recognized an after-tax gain of $124.8 million, or 87 cents per share, related to the sale of the Millstone Nuclear Station to Dominion Resources on March 31. Additionally, NU recorded a non-cash charge of $43.4 million, or 30 cents a share, related to the forward purchase of 10.1 million NU common shares in December 1999 and January 2000.
NU Chairman Michael G. Morris said the earnings of NU's regulated subsidiaries were reduced in 2001 by the scheduled refueling of the Millstone 3 nuclear plant, which began Feb 3 and ended March 31. The refueling cost NU $19 million after-tax. Regulated business operating earnings also fell by nearly $7 million, or $0.05 per share, as a result of a 5% rate reduction that took effect at Public Service of New Hampshire. On the other hand, Yankee Energy earned $15.6 million compared to $1.9 million in 1Q2000.
Results at NU's unregulated energy companies were hurt by nuclear refueling outages. Extended refueling outages at Millstone 3 and the Seabrook nuclear plant caused Select Energy to have to acquire energy for resale at higher costs --- a problem originally cited by Consolidated Edison as a main reason it wanted out of its proposed merger with NU (see NGI, March 12). NU's unregulated energy businesses lost $4.2 million, or $0.03 per share, in the first quarter of 2001, compared with a profit of $10 million, or $0.07 per share, in the first quarter of 2000.
Morris said NU continues to project operating earnings of between $1.40 per share and $1.60 per share in 2001. That estimate excludes nonrecurring items. Prior to last week's earnings release, Wall Street expected NU to earn $1.59/share this year.
NU operates New England's largest energy delivery system with 1.77 million electric customers in Connecticut, New Hampshire and Massachusetts and 187,000 natural gas customers in Connecticut.
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