Sierra Pacific Posts 3rd Quarter Gains

By: Associated Press
By: Associated Press

Sierra Pacific Resources, trying to stay afloat in the wake of the 2001 energy crisis and ongoing legal battles with the bankrupt Enron, on Thursday posted third quarter net income of $86.9 million, up about 9 percent over the same quarter a year ago.

The parent firm of Nevada Power and Sierra Pacific Power companies said above-normal temperatures in July spurred demand for power.

"The third quarter saw some of the hottest weather on record including three new power consumption peaks" for both utilities, said Walt Higgins, Sierra Pacific chairman and chief executive.

Noting the region's rapid population growth, Higgins said, "I'm proud to say that despite these challenges our two utilities continue to provide adequate and reliable supplies of electricity to meet our customers needs."

Higher revenues, however, were offset by decreased rates allowed by state regulators and higher interest costs on long-term debt.

Earnings per share dropped to 28 cents - compared with 78 cents on net income of $79.4 million in the third quarter of 2002 - because of more outstanding shares. Stock holders in August authorized the company to issue up to 42.7 million shares to redeem convertible notes to restructure debt.

Despite the quarterly gain, losses for the first nine months of the year totaled $103 million, the company said, an improvement from the $268 million loss realized in the same period last year.

Nevada Power, which services the Las Vegas area, reported net income during the period of $62.5 million, down from $79.3 million in 2002.

Sierra Pacific Power in northern Nevada had a net loss of $1.3 million, compared with net income of $12.6 million the year before.

Higgins said the two utilities, in rate cases to be filed with the Nevada Public Utilities Commission, will seek to recover expenses for purchased energy and other operating costs.

Sierra Pacific blames much of its financial troubles on the 2001 energy crisis when it says it was forced to purchase power on the volatile market at exorbitant prices. State regulators later disallowed the power companies' requests to recoup much of those costs from customers.

In June, the Federal Energy Regulatory Commission denied the company's request to invalidate about $290 million in long-term energy contracts Sierra Pacific signed during the height of the energy crisis.

Higgins said the company is preparing to take its case to a federal appeal's court, after the federal regulatory commission on Monday denied its request to reconsider its previous ruling.

Sierra Pacific is also appealing a bankruptcy judge's ruling that the two Nevada utilities must pay Enron Corp. $336 million for terminated power contracts.

In a complaint filed in October, the two Nevada utilities sought FERC's intervention in the Enron bankruptcy case, arguing execution of the contract judgment could force them into bankruptcy.

Last week, the bankruptcy judge stayed the judgment, but required the utilities to put up $338 million in bonds and $280,000 in prejudgment interest into an escrow account while the appeal is pending.

Sierra Pacific Resources was formed in 1999 by the merger of Reno-based Sierra Pacific Power and Nevada Power headquartered in Las Vegas. It supplies electricity to 954,000 customers over a 55,000-square-mile area in Nevada and the eastern Sierra and natural gas to 119,500 people in the Reno-Sparks area.


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