By the OGJ Online Staff
HOUSTON, Apr. 16�Citing high power costs and other problems associated with the energy crisis in the West, Sierra Pacific Resources Friday said it is reducing expenses in all areas except safety and customer service and will suspend the quarterly dividend.
Sierra Pacific Resources the holding company for Sierra Pacific Power Co. and Nevada Power Co. has paid a quarterly dividend of 25�/share. While the dividend is "vitally important" in retaining investor confidence at a time when new energy infrastructure is so critical to protecting consumers from this crisis, said CEO Walt Higgins, president and CEO, "it is equally important that our dividend reflect our current financial condition and the continued uncertainty about the energy crisis."
The company said the dividend policy will be reviewed again at the next board meeting set for May 21. In early trading Monday, the stock was off 8.62% to $13.25.
"We recognize that this decision is painful to shareholders who have already suffered an unprecedented drop in the value of their investment," said Higgins. "However, it is really the only decision that can be made until we can get a more definitive view of how and when this crisis can be resolved."
The company said the board also extended cost control programs that have been undertaken to reduce all expenses other than those associated with safety and customer service.
Sierra Pacific said the reductions are focused on noncritical activities and include a slowdown in hiring, reduced administrative expenses, and the elimination of incentive pay this year for the executive staff. It did not say how much the program is expected to save.
The company has said it incurred an unanticipated expense of $889 million in 2000 to buy electricity and gas on the open market, producing a full year loss of $39.8 million or 51�/share. The company won some relief when state regulators approved a 17% rate hike in February.
Bills are now pending the Nevada legislature that would ban the previously mandated sale of Sierra Pacific's power plants and would also reinstate rules that insure utilities can recover fuel and purchased power costs from ratepayers.
