Sempra reports improved results on trading, utility income

Sempra Energy, parent of San Diego Gas & Electric Co., reported a 58% increase in first quarter income driven by unregulated marketing and trading activities and stable utility earnings. In sharp contrast to near bankrupt Southern California Edison Co. and Pacific Gas & Electric Co., now under bankruptcy protection, San Diego Gas & Electric reported income was unchanged at $52 million for the quarter, compared to a year ago.


By the OGJ Online Staff

HOUSTON, Apr. 26, -- Sempra Energy, parent of San Diego Gas & Electric Co., reported a 58% increase in first quarter income driven by unregulated marketing and trading activities and stable utility earnings.

The San Diego-based energy company earned $178 million, or 88¢/share on revenue of $3.3 billion in the 2001 first quarter, compared with $113 million or 49¢/share on $1.5 billion for last year's comparable quarter.

The company also upped expectations for annual earnings per share to $2.50/share compared to $2.20. The increase reflects an expectation of continued "robust" results from its unregulated unit, Sempra Energy Trading.

Sempra Energy Trading contributed $86 million or 48% of the quarter's income. Increased volatility in energy commodity markets and higher trading volumes contributed to the increase, the company said.

Physical trading volumes of gas were 12.2 bcfd up 51% from 8.1 bcfd in the year earlier period, and electricity traded totaled 18 billion kw-hrs, up 154% from 7.1 billion kw-hr in the comparable 2000 quarter.

Sempra Energy Resources, the merchant energy group, earned $4 million from its investment in the El Dorado merchant power plant in Nevada compared to break even income last year. The company broke ground on two more merchant plants in the first quarter, one in Bakersfield, Calif., and the other in Arizona that will sell into the power-starved US Southwest market.

In sharp contrast to near bankrupt Southern California Edison Co. and Pacific Gas & Electric Co., now under bankruptcy protection, San Diego Gas & Electric reported income was unchanged at $52 million for the quarter, compared to a year ago.

The utility will continue to benefit from an agreement signed earlier this month with the California Department of Water Resources under which the DWR will buy through 2002 all power that San Diego Gas & Electric cannot supply from its own generating resources.

This limits the utility's undercollection balance or the difference in the cost of wholesale power purchases and what can be collected in rates. The total balance stands at $747 million, Sempra said.

"As long as the DWR continues to purchase power on behalf of all the utility's customers, the company does not expect further significant growth in the undercollection," the company said in a statement.

The utility has a rate surcharge request pending at the California Public Utilities Commission to recover its undercollections, said CEO Stephen Baum.

On the gas utility side, the company said net income was also mostly unchanged at $51 million in the 2001 first quarter, compared with $50 million for the 2000 first quarter.

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