Peeling back some of the underlying impacts on first quarter results among Western energy sector players this month, high wholesale natural gas prices play a part in just about all of them as found in the varying levels of success among several companies this week.

“One of the major issues confronting our company, and in fact, our industry and the entire nation, are the skyrocketing costs of crude oil and natural gas,” said Sierra Pacific Resources CEO Walt Higgins during a conference call with financial analysts Tuesday in which his holding company of Nevada’s two major electric utilities reported a first quarter loss, albeit smaller than the one a year earlier. Sierra’s Reno-based utility subsidiary, Sierra Pacific Power Co., on Friday will file for its annual adjustment in rates to account for high wholesale gas costs, and both the combination utility and Nevada Power Co. later will be filing for fuel cost adjustments on their electric operations.

“Because we also use gas in many of our generating plants, similar to many utilities around the country, the high natural gas prices are regrettably going to have an impact on electricity prices as the year wears on,” said Higgins, adding that reliability will not be a problem this summer as Nevada has sufficient supplies of electricity and fuel.

New Jersey-based NRG Energy Inc. on Tuesday reported greatly reduced quarterly financial numbers, although no losses, and in a break out of its results, gross profit (EBITDA) dropped from $33.3 million in the first quarter last year to $3.5 million for its Western (mostly California) power plant operations, and that is largely because of thin margins, or “spark spreads,” caused by the high natural gas prices.

Although experiencing a doubling of its earnings-per-share profits for the quarter, Edison International, the holding company for Southern California Edison Co., reported nearly a $200 million increase in fuel costs in the first quarter this year, compared to the same period in 2004 ($419 million this year vs. $227 million for the quarter a year earlier). For Edison, merchant generation operations in the Midwest and East benefited from greatly higher wholesale power prices to offset the rising natural gas costs, but its utility had to deal with the higher costs of producing power.

In a financial analysts’ call Monday, Edison officials confirmed the company is seeing ever-higher off-peak prices in the wholesale power market. “This is a period of time where many of the plants are out for maintenance prior to the summer peak demand season, so that can change the mix of what types of generation plants are on the margin,” said Tom McDaniel, Edison CFO. “Also our really higher SO2 [sulfur dioxide] emission costs can be driving off-peak prices, so we are pleased to see that and would hope that it would continue through the rest of the year.”

McDaniel said the forward prices right now point toward continued higher-than-normal off-peak prices.

In looking at future resource planning in high-growth areas such as southern Nevada, Higgins said Sierra Pacific Resources has regulators’ preliminary approval of, and is “very interested in pursuing,” a new coal-fired generation plant for Nevada that would come on line by 2010. This interest is driven by the continuing high natural gas prices, Higgins said.

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