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Sierra Pacific Resources' 3Q Profits Up on Utility Customer Growth

With or without adjustments for one-time, nonrecurring items, Sierra Pacific Resources last Friday reported increased profits for the third-quarter and nine-month periods this year, compared to the same periods last year. The company attributed the increase to continued customer growth at Sierra's two Nevada utilities, Nevada Power Co. and Sierra Pacific Power Co., along with carrying charges associated with the new Chuck Lenzie Generating Station near Las Vegas, NV.

For the third quarter, after adjustments, earnings were $106 million, or 50 cents/share, compared with $100.9 million, or 55 cents/share, for the same period in 2005. Nine-month results this year were $135.1 million, or 66 cents/share, compared with $100.4 million, or 55 cents/share, for the first nine months last year.

Without the adjustments for the one-time gains, earnings for the third quarter and nine months were $222.2 million, or $1.05/share, and $251.3 million, or $1.23/share, respectively, compared with $61 million, or 33 cents/share, and $60.6 million, or 33 cents/share, for the respective periods in 2005.

The continuing favorable financial results and improving credit ratings were overshadowed by Sierra"s announcement last Thursday on the sale of its 50% interest in the Tuscarora natural gas pipeline (see Daily/GPI, Nov. 3) and the anticipation of the Nevada Public Utilities Commission's (PUC) decision in the next two weeks on Sierra's multi-billion-dollar coal generating plant and transmission proposal as part of its draft integrated resource plan (IRP) for both utilities.

Noting that the utilities expect a "near-record year" for new customer hookups this year, Sierra Pacific Resources CEO Walter Higgins stressed that the continued growth "will require a major investment in new power generation and transmission facilities," underscoring the pending project at the Nevada PUC. "Our goal is to reduce Nevada's dependence on purchased power from sources outside the state and to diversify our fuel mix, including renewable sources of energy," he said. The proposed projects "in the long run, will result in more stable energy rates for our customers."

Higgins also said the utilities are "making progress" in reducing capital costs and attaining the long-sought return to investment-grade credit ratings. "Fitch has upgraded the senior secured debt of the utilities to investment grade, and Standard and Poor's and Moody's now have the utilities' senior secured debt rated one level below investment grade," Higgins said.

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