Orange and Rockland reports third quarter earnings.
According to D. Louis Peoples, vice chairman and chief executive officer, the earnings decline is the result of the customer refund provisions described in the Settlement Proposal section below as well as the continued underperformance of the company's diversified operations during the current quarter compared with the same period a year ago. These expenses were partially offset, however, by higher electric sales in New Jersey resulting from the unusually warm summer weather, coupled with reduced operating and interest expenses in the company's core utility business.
Total sales of electric energy to retail customers were 1,310, 370 megawatt hours (Mwh) during the third quarter of 1995, compared with 1,242,025 Mwh during the third quarter of 1994. The higher sales are attributable to warmer weather, which resulted in the company experiencing record peak demands on seven separate occasions during the summer. Electric revenues associated with this quarter's sales were $140.4 million, compared with $142.0 million for the third quarter of 1994. These revenues reflect the recovery of lower fuel costs and the effect of the company's Revenue Decoupling Mechanism (RDM) agreement with the New York Public Service Commission, whereby revenues below or above established targets are recovered from -- or returned to -- customers. The company's New Jersey and Pennsylvania electric sales are not governed by an RDM agreement.
Sales to other utilities totaled 20,406 Mwh in the third quarter of 1995, compared with 64,500 Mwh in the prior year. Revenues amounted to $400,000, versus $1.4 million a year ago. Because revenues from these sales are primarily a recovery of costs in accordance with applicable tariff regulations, they have almost no impact on the company's annual earnings.
Gas sales to firm customers totaled 1,556 million cubic feet (Mmcf) during the third quarter of 1995, compared with 1,581 Mmcf during the same period a year ago. Third quarter gas revenues from these sales were $11.0 million, compared with $11.2 million in the third quarter of 1994. The revenue decline results from the recovery of lower gas costs as well as the lower sales compared with the same period a year ago.
Recoverable costs, including economic purchase of fuel for electric generation, gas purchased for resale, reconcilable demand-side management expenses and purchased power, declined by $2.6 million to $45.8 million in the third quarter of 1995, compared with $48.4 million in the same period a year ago. Other third quarter 1995 expenses amounted to $90.8 million, compared with $92.6 million for the same period in the prior year. The reduction in operation and maintenance expenses resulted from aggressive cost-cutting and operating efficiencies.
Proposed Rate Reduction Accelerated
On Aug. 1, 1995, the New York State Public Service Commission approved a stipulated agreement that provides for Orange and Rockland's 1.8 percent electric rate reduction proposal, filed in May 1995, to become effective immediately, eight months earlier than originally proposed. The company thereby became the only New York electric utility to voluntarily reduce base rates since 1988.
Under the stipulated agreement, Orange and Rockland's target return on common equity increases from 10.6 percent to 11.3 percent, effective Jan. 1, 1995. The agreement calls for sharing earnings equally with electric customers when the return on common equity exceeds 11.3 percent.
The agreement will remain in effect until the company's rate case proceeding is completed. At that time, the Public Service Commission will determine if further modifications to the agreement, which would be effective in April 1996, are necessary. The agreement has no effect on the company's gas rates.
Orange and Rockland has been joined by the New York State Public Service Commission Staff, the New York State Consumer Protection Board and the Industrial Energy Users Association in filing a joint proposed settlement agreement under which the company would provide a total of $8.5 million in rate relief to New York electric and gas customers as a result of the investigation into the improprieties of certain former officers and employees. Following public review and comment, the proposal is expected to be considered by the Public Service Commission by year-end.
The proposal calls for approximately $6.5 million to be returned to electric customers through credits on their bills. In addition, the company would forgo a gas rate increase of $1.7 million and would provide a gas refund of $300,000. The financial impact of the settlement -- as well as a proposed $600,000 settlement for New Jersey electric customers -- has been fully provided for as of Sept. 30, 1995.
We believe that this agreement represents an equitable resolution of this matter. It is the result of meticulous financial study, a detailed accounting of pertinent records and an exhaustive review of Orange and Rockland's investigation report and of our administrative policies and procedures.
Orange and Rockland serves an area of 1,350 square miles and a population of 666,000 in southeastern New York State, northern New Jersey and northeastern Pennsylvania. It generates, distributes and sells electricity, and distributes and sells natural gas. -0-
Orange and Rockland Utilities, Inc. Pearl River, New York 10965 Consolidated Operating Results (Unaudited)
Three Months Ended September 30 1995 1994
Total Revenues $ 231,905,979 $ 237,866,185 Net Income $ 14,792,215 $ 16,381,832 Earnings Per Share $ 1.03 $ 1.14 Average Common Shares Outstanding 13,653,594 13,627,324
Nine Months Ended September 30 1995 1994
Total Revenues $789,112,111 $ 758,222,687 Net Income $ 33,835,094 $ 33,829,595 Earnings Per Share $ 2.31 $ 2.31 Average Common Shares Outstanding 13,653,279 13,575,025
Twelve Months Ended September 30 1995 1994
Total revenues $1,047,791,697 $1,011,793,194 Net Income $ 37,222,719 $ 39,647,525 Earnings Per Share $ 2.49 $ 2.68 Average Common Shares Outstanding 13,653,173 13,564,281
CONTACT: Orange and Rockland Utilities Inc., Pearl River
Michael Donovan, 914/577-2430