Second quarter results from 39 major gas and power generators and marketers show earnings down 40% from the first quarter and more than two-thirds from the same period last year, according to Maryland-based consulting firm Energy Performance Review. Earnings before special items totaled $1.3 billion, or 7 cents/Mcf, compared to $2.3 billion in the prior quarter and $3.6 billion, or 23 cents/Mcf, for the second quarter of 2001. Lower prices for natural gas and electricity were partly offset by increased sales. Revenues totaling $80 billion were off 6% from both the prior quarter and the prior-year quarter.

A ranking of top power marketers by EPR showed power sales up 40% from the second quarter of last year but down 13% from the first quarter of 2002. Nearly half the power marketers reported sales declines compared to the first quarter, with Cinergy showing a 70% drop, Reliant down 40%, PG&E National Energy Group (NEG) down 34% and Dynegy down 31%.

Aquila, which was the second largest power marketer in the ranking, quit the business, leaving the other players to fend for its 138 million MWh. In fact, the credit crunch and financial crisis this summer has cut into trading and forced many of the major marketers to downsize their businesses. Third quarter volumes are expected to be down even more significantly.

EPR reported that six-month earnings before special items from the 39 companies on its list totaled $3.5 billion, or $0.09/Mcfe, down 52% from 2001 on revenues that had declined 15%.

Special items for the second quarter totaled a net negative $877 million and included several major charges: a $284 million writedown for Mirant Corp. (for UK assets), a $179 million impairment and a $51 million restructuring charge for Aquila Wholesale, a $129 million impairment for PG&E NEG, a $126 million charge for Dynegy (various items) and a $57.5 million impairment for Williams Energy Marketing. Items for the 2001 period included two major charges totaling $188 million. Including these items, earnings for the group declined 86%, to $457 million.

Natural gas sales for the companies that reported volumes increased about one-third from the prior-year quarter, but average realization on these volumes declined, to average $3.72/Mcf. The greatest gains period-to-period were reported for Dominion Energy at 107% to 593 Bcf, Mirant Corp. at 89% to 2,029 Bcf, PG&E National Energy Group at 56% to 2,384 Bcf, and Reliant Wholesale at 50% to 1,077 Bcf.

Average electricity sales realizations declined to average 4.34 cents per kWh from 6.86 cents in 2Q2001. The greatest gains in sales realizations were posted by WGL Energy Marketing, Allegheny Energy Supply, CMS Energy Marketing, NRG Energy and El Paso Merchant.

EPR also tallied results from 42 major electricity distributors, which reported earnings before special items totaling $4 billion, or 0.71 cents/kWh sold, for the second quarter, up from $3.5 billion, or 0.63 cents/kWh, for the prior quarter, and up 7% from the $3.8 billion, or $0.71 cents/kWh, for the prior-year quarter. Revenues totaling $34 billion were up 6% from the prior quarter, but off 4% from the prior-year quarter.

Six-month earnings before special items totaled $7.5 billion, or 0.67 cents per kWh, flat from 2000. Revenues were off 7%. Total electricity deliveries were up 7% from the prior-year quarter, primarily reflecting increased wholesales. Average realization on final sales was about flat, at 7.07 cents/kWh. Residential realization also was about flat at 8.6 cents.

The most profitable companies measured by earnings relative to total deliveries (cents per kWh) and reported pre-tax were NiSource at 1.95 cents and Duke Energy at 1.91 cents. The most profitable reported net of tax were Southern California Edison at 3.68 cents (including the $480 million special gain), Exelon Delivery at 1.09 cents and FirstEnergy at 1.08 cents.

Source: Energy Performance Review (https://www.energyperformancereview.com/) Information was gathered from Securities and Exchange Commission filings and reported with earnings and revenues, except in the case of BP, Coral Energy and Allegheny Energy, which directly reported the information to EPR or NGI. BP and Coral were added to EPR’s list. Numbers in ( ) represent rank in the first quarter 2002. *Volumes for CMS Energy and CMS IPP were combined. **Totals exclude the volumes reported by Reliant Retail.

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