Sierra Pacific Losses Continue Into 1st Quarter of Year

By  | 

The parent company of Nevada's two electric utilities, still bleeding financially from the 2001 energy crisis, reported a consolidated net loss of $44.5 million, or 38 cents per share, for the first quarter of 2004.

The losses reported by Reno-based Sierra Pacific Resources compare with a net loss of $11.2 million, or 10 cents a share, for the same quarter in 2003.

Company officials attributed the first quarter losses to after-tax costs of approximately $26 million for refinancing expenses and one-time write-offs related to merger and disallowed deferred energy costs.

The quarterly report follows yearly losses of $140.5 million, or $1.21 per share, in 2003 and $307.5 million, or $3.01 per share, in 2002.

Sierra Pacific Chairman, President and CEO Walter Higgins, who last week won re-election to the board despite criticism from the company's second largest shareholder, reiterated his belief that the struggling utility can regain financial footing and become profitable.

"We're strengthening our company's financial condition but we still have many important challenges ahead," Higgins said in a conference call with Wall Street analysts. "Foremost among our goals is restoring Sierra Pacific's creditworthiness and shareholder value.

"Because of our financial challenges, it will take time to attain these objectives," he said, adding, "We believe that in the long term, the business strategies we are pursuing will result in a financially healthy company."

The company's southern Nevada utility, Nevada Power Co., reported a net loss of $15.4 million for the quarter that ended March 31, about $200,000 more than the same quarter last year.

Though gross electric margin - or revenues after energy costs are deducted - rose $11.7 million or 12.5 percent over the first quarter of 2003, officials say those gains were offset by higher maintenance costs, interest on debt and disallowed merger costs.

Sierra Pacific Power, which operates in northern Nevada and portions of eastern California, reported a net income of $6.7 million, up from $3 million for the same period in 2003.

The company attributed those gains to increased electricity and natural gas consumption during the cold winter months and customer growth.

Higgins said both utilities were positioned to meet anticipated power needs for the hot summer months ahead.

Sierra Pacific shares closed Tuesday at $6.94 on the New York Stock Exchange, up 37 cents.

Sierra Pacific has struggled financially since signing long-term contracts for high-priced power during the 2001 energy crisis with companies including Enron, the Houston-based energy trader that filed for bankruptcy protection in December 2001.

State regulators later disallowed Nevada Power and Sierra Pacific Power requests to recoup much of those purchased power costs from customers.

Last year, the Federal Energy Regulatory Commission denied the company's request to invalidate about $290 million in long-term energy contracts. The company is appealing.

Sierra Pacific also is appealing a bankruptcy judge's ruling that the two Nevada utilities must pay Enron $335 million for terminated power contracts.

The Nevada utilities argue that Enron manipulated the energy market and gouged them with when prices were highest. The bankruptcy judge has stayed the ruling while the appeal is pending, but required the utilities to post bonds and cash in an escrow account to cover the judgment.

Higgins said arguments of the bankruptcy appeal are scheduled for May 28 in U.S. District Court in New York.

"We will continue to pursue all legal options available to prevent Enron from collecting one dime," Higgins said.