Edison International (EIX), the owner of California’s second-largest electric utility, said quarterly profit fell as low power prices dragged down results at its generation unit and a rate case delay cut into utility earnings.
Net income fell to $103 million, or 23 cents a share, from $191 million, or 54 cents, a year earlier, the Rosemead, California-based company said today in a statement. Excluding results from a coal plant that the company intends to transfer to General Electric Co. (GE), per-share profit was 32 cents, more than the 28-cent average of nine analysts’ estimates compiled by Bloomberg.
Sales rose 2.5 percent to $3.06 billion. Net income at the company’s Southern California Edison utility fell 9.5 percent to $191 million on increased costs that cannot be recovered due to a rate case delay and expenses related to inspections and repairs at its San Onofre nuclear power plant. Net loss at Edison Mission Group, a generation unit, widened to $110 million from $30 million a year ago on lower power prices and higher fuel costs.
Edison’s San Onofre nuclear power plant, operated by Southern California Edison, has been offline since January after inspectors found unusual wear on its steam generator tubes. The shutdown of the reactors is costing about $1.5 million a day in lost revenue, according to a July 3 report by Bloomberg New Energy Finance.
San Onofre’s Return
Edison will likely be able to return San Onofre’s Unit 2 to service “months in advance” of Unit 3 because it had less tube wear, Chief Executive Officer Ted Craver said in a regulatory filing today. The company said it is “less likely” Unit 3 will be online this year and the utility plans to remove fuel from the reactor and conduct additional analysis and tests, according to the filing.
Costs to inspect and repair San Onofre have totaled $48 million and the utility has spent $117 million on replacement power, Chief Financial Officer Jim Scilacci said today during a conference call with investors. The utility estimates it will cost $25 million to restart Unit 2 at reduced power, Scilacci said.
The company has notified Nuclear Electric Insurance Ltd. of potential claims for accidental property damage and outage costs. Insurance covers as much as $2.75 billion in accidental property damage and up to $490 million of outage costs per unit while policy exclusions or limitations may reduce or eliminate coverage, according to a filing.
Faulty computer modeling and manufacturing changes led to the wear at San Onofre’s steam generator tubes, the U.S. Nuclear Regulatory Commission said in a July 18 report. The reactors are located about 60 miles (97 kilometers) south of Los Angeles and generate enough power for 1.4 million homes.
The company is working to restructure about $3.7 billion in debt at its Edison Mission generation unit, which has been hurt by a slump in power prices and rising environmental-compliance costs for its coal-fired power plants, Craver said in the filing today. The company is in talks with bondholders to restructure debt and may have to reorganize its generation unit under new ownership if talks are unsuccessful, Craver said.
The benchmark power price in PJM Interconnection LLC, a wholesale market where Edison’s generation unit sells power, fell 27 percent to a second-quarter average of $41.51 a megawatt-hour.
Natural gas, which helps set the price of electricity, fell to a 10-year low in April and averaged $2.354 per million British thermal units during the quarter, 46 percent less than a year earlier.
Edison’s earnings statement was issued after the close of regular trading in New York. Edison’s shares fell 24 cents, or 0.5 percent, after the close of regular trading in New York.
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