UPDATE: PSEG Swings To 2Q Profit Despite Cool Weather
July 31 2009 - 12:35PM
Dow Jones News
Public Service Enterprise Group Inc. (PEG) swung to a
second-quarter profit on strength in its power-generation business
amid higher prices as the New Jersey-based electricity provider
continues to deal with lower demand at its power-generation
business and cooler weather.
The company has been able to manage through the weaker power
usage with lower fuel costs and minimizing other costs, including
reducing the use of coal-fired plants. The company had said in May
that it expected warmer weather to drive stronger demand than usual
in the summer.
But Chairman and Chief Executive Ralph Izzo said the company's
results have been hurt by the second-coolest June since 1970. He
added the "abnormally cool" weather through the end of July will
challenge the company's ability to meet the upper end of its
full-year outlook, which it reaffirmed.
The company posted income of $311 million, or 61 cents a share,
compared with a year-earlier loss of $150 million, or 29 cents a
share. Excluding items, earnings rose to 63 cents from 61 cents.
Analysts polled by Thomson Reuters expected earnings of 62
cents.
Revenue figures weren't provided by PSEG in a press release
detailing the quarterly results.
The company's New Jersey-based utility segment reported a 10%
increase in profit as margins benefited from higher average prices,
although generation fell 15% in the quarter amid the recession and
cool weather. The prices PSEG gets for the power it generates are
set at a yearly auction.
"We have higher prices from the most recent auction rolling in,
with lower prices rolling off," said Caroline Dorsa, PSEG's chief
financial officer, in an interview with Dow Jones Newswires. PSEG
has also worked to boost profits by limiting operating and
maintenance expenses, Dorsa said.
The utility doesn't expect to make any significant reductions in
capital expenditures, she added.
PSEG's power-generation business saw earnings fall 16% on weaker
demand for electricity.
Wednesday, the company said New Jersey regulators cleared it to
spend $515 million on 80 megawatts worth of solar-power projects
across the state through the end of 2013. The program will be paid
for with electric-rate increases, with costs offset by federal and
state tax credits.
The company's shares were recently down 2.33% at $32.66.
-By Kerry Grace Benn and Christine Buurma, Dow Jones Newswires;
212-416-2353; kerry.benn@dowjones.com