Xcel Energy Second Quarter 2001 Earnings On Target.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--July 25, 2001 Xcel Energy achieved ongoing earnings of 46 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. in the second-quarter of 2001 after a 4 cent per share charge related to the recently adopted Statement of Financial Accounting Standards No. 133 (valuation of derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. ). "We're right on target," said Wayne Brunetti, president and chief executive officer. "Our utility operations and subsidiary NRG Energy NRG Energy, Inc. (NRG) is a wholesale power generation company founded in 1989, which has an ownership interest in 47 power generating facilities around the world. The diverse portfolio of facilities, are primarily in the Northeast, South Central and Western regions of the United are delivering excellent operational and financial results. We continue to benefit from our merger of almost a year ago, and we are delivering on the goals we have set." "With our continued strong financial performance, we expect to achieve ongoing earnings per share of $2.30 for 2001," Brunetti said. Earnings for the second quarter of 2000 were 46 cents per share. Total earnings of 42 cents per share reflect an extraordinary charge of 4 cents per share related to utility restructuring. In comparison, total earnings for the second quarter of 2001 were 49 cents per share, which includes the resolution of two regulatory items which increased earnings by a net 3 cents per share. Xcel Energy's 74-percent quarterly average stake in NRG Energy, a leading global energy company, contributed 11 cents per share in the second quarter of 2001, compared with 13 cents per share on an average 89-percent ownership basis in the second quarter of 2000. For the 12 months ended June 30, 2001, Xcel Energy had earnings per share (excluding special charges, regulatory adjustments and extraordinary items) of $2.28, compared with $2.05 per share for the comparable period in 2000. NRG Energy contributed 49 cents per share to Xcel Energy's earnings for the 12 months ended June 30, 2001, compared with 32 cents per share for the comparable period in 2000. This release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "estimate," "expect," "projected," "objective," "outlook," "possible," "potential" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including their impact on capital expenditures; business conditions in the energy industry; competitive factors; unusual weather; changes in federal or state legislation; regulation; risks associated with the California power market; currency translation and transaction adjustments; the higher degree of risk associated with Xcel Energy's nonregulated businesses compared with Xcel Energy's regulated business; and the other risk factors listed from time to time by Xcel Energy in reports filed with the Securities and Exchange Commission (SEC), including Exhibit 99.01 to Xcel Energy's report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2001. Xcel Energy will host an earnings conference call beginning at 1:30 p.m. Central Time on July 25. The conference call will be broadcast on our Web site at the following location: http://www.xcelenergy.com, then click on: Investor Information. In addition, the call can be accessed live at 1-800-450-0788. The call will be available in a replay mode from 5:00 p.m. on July 25 through 11:59 p.m. on July 27, Central Time. Replay numbers: U.S. Dial-In: 800-475-6701 International Dial-In: 320-365-3844 Access Code: 592663 This information is not given in connection with any sale or offer for sale or offer to buy any security.
XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Thousands of Dollars, Except per Share Data)
Three months ended Twelve months ended
June 30 June 30
---------------------- ----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Operating revenues:
Electric utility......$1,652,351 $1,282,780 $6,378,333 $5,116,348
Gas utility........... 400,405 233,249 2,110,408 1,202,305
Electric and gas
trading.............. 860,951 367,157 3,294,223 1,323,432
Nonregulated and other 723,048 533,030 2,829,622 1,359,111
Equity earnings from
investments in
affiliates........... 61,802 57,439 197,458 154,857
---------- ---------- ---------- ----------
Total operating
revenues............ 3,698,557 2,473,655 14,810,044 9,156,053
Operating expenses:
Electric fuel and
purchased power -
utility.............. 823,059 519,599 3,158,102 2,138,533
Cost of gas sold and
transported - utility 292,042 141,793 1,553,757 728,496
Electric and gas
trading costs........ 841,331 353,058 3,197,055 1,303,357
Cost of sales - non-
regulated and other.. 419,588 258,596 1,544,865 544,391
Other operating and
maintenance expenses
- utility............ 365,697 348,691 1,424,060 1,348,122
Other operating and
maintenance expenses
- nonregulated...... 191,572 137,415 758,439 475,687
Depreciation and
amortization......... 221,075 197,321 844,283 732,769
Taxes (other than
income taxes )...... 87,753 89,280 351,984 352,471
Regulatory adjustment
- postemployment
benefits............. 23,018 - 23,018 -
Special charges ...... - - 241,042 32,051
---------- ---------- ---------- ----------
Total operating
expenses............ 3,265,135 2,045,753 13,096,605 7,655,877
---------- ---------- ---------- ----------
Operating income....... 433,422 427,902 1,713,439 1,500,176
Other income (expense):
Minority interest..... (9,909) (7,929) (49,323) (10,714)
Other income and
(expenses) - net..... 10,708 (1,888) 32,315 27,045
---------- ----------- ---------- ----------
Total other income
(expense)........... 799 (9,817) (17,008) 16,331
Interest charges and
financing costs:
Interest charges - net
of amounts capitalized 186,467 171,405 708,386 546,419
Distributions on
redeemable preferred
securities of
subsidiary trusts.... 9,700 9,700 38,800 38,800
---------- ---------- ---------- ----------
Total interest
charges and
financing costs..... 196,167 181,105 747,186 585,219
---------- ---------- ---------- ----------
Income before income
taxes and
extraordinary item.... 238,054 236,980 949,245 931,288
Income taxes........... 70,197 80,240 336,363 264,630
---------- ---------- ---------- ----------
Income before
extraordinary item.... 167,857 156,740 612,882 666,658
Extraordinary item, net
of tax................ - (13,658) (5,302) (13,658)
---------- ----------- ----------- -----------
Net income............. 167,857 143,082 607,580 653,000
Dividend requirements
and redemption
premiums on
preferred stock....... 1,060 1,060 4,241 4,242
-------- -------- ------- -------
Earnings available for
common shareholders... $ 166,797 $ 142,022 $ 603,339 $ 648,758
========== ========== ========== ==========
Weighted average common
shares outstanding -
diluted (1000's)...... 343,688 337,634 340,970 334,950
Earnings per share -
diluted:
Earnings before
unusual items ....... $ 0.46 $ 0.46 $ 2.28 $ 2.05
Regulatory decisions.. 0.03 - 0.03 -
Special charges....... - - (0.52) (0.07)
Extraordinary item.... - (0.04) (0.02) (0.04)
---------- ---------- --------- -------
Total................ $ 0.49 $ 0.42 $ 1.77 $ 1.94
========== ========= ========== ==========
See Notes to Consolidated Financial Statements
XCEL ENERGY INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . Notes to Financial Statements (Unaudited) Due to the seasonality of Xcel Energy's operating results, quarterly financial results are not necessarily an appropriate base from which to project annual results. Note 1. Merger to Form Xcel Energy On Aug. 18, 2000, New Century Energies, Inc. (NCE NCE Networks of Centres of Excellence NCE New Chemical Entity (pharmaceutical research) NCE Normal Curve Equivalent NCE New Civil Engineer (UK Journal) NCE Non-Commercial Educational NCE New Century Energies ) and Northern States Power Co. (NSP (1) (Network Service Provider) An organization that provides a high-speed Internet backbone to ISPs and other service providers. Sprint, MCI and UUNET are examples of NSPs. See Internet backbones. ) merged and formed Xcel Energy Inc. Xcel Energy, a Minnesota corporation, is a registered holding company under the Public Utility Holding Company Act Public Utility Holding Company Act The 1935 act that gives the SEC authority over the security issues, the accounting systems, the corporate structures, and the intercompany transactions of public utilities. (PUHCA PUHCA Public Utility Holding Company Act ). Each share of NCE common stock was exchanged for 1.55 shares of Xcel Energy common stock. NSP shares became Xcel Energy shares on a one-for-one basis. The merger was structured as a tax-free, stock-for-stock exchange for shareholders of both companies (except for fractional shares Fractional share Stocks amounting to less than one full share, usually resulting from splits, acquisitions, exchanges, or dividend reinvestment programs. fractional share Less than one share of stock, that is, one-third or one-half a share. ), and accounted for as a pooling-of-interests. Amounts reported for periods prior to the merger have been restated for comparability with post-merger results. Xcel Energy directly owns six utility subsidiaries that serve electric and natural gas customers in 12 states. These six utility subsidiaries are Northern States Power Company Northern States Power Company (formerly NYSE: NSP) was a publicly-traded S&P 500 electric and natural gas utility holding company based in Minneapolis, Minnesota that is now a subsidiary of Xcel Energy (NYSE: XEL). , a Minnesota corporation (NSP-Minnesota), Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin), Public Service Company of Colorado (PSCo), Southwestern Public Service Company (SPS (Standby Power System) A UPS system that switches to battery backup upon detection of power failure. See UPS. SPS - Symbolic Programming System. Assembly language for IBM 1620. ), Black Mountain Gas Company (BMG BMG Bundesministerium für Gesundheit (Germand: Federal Ministry for Health) BMG Be My Girl BMG Blue Man Group BMG Bertelsmann Music Group BMG Be My Guest BMG Browning Machine Gun BMG Bulk Metallic Glass ) and Cheyenne Light, Fuel and Power Company (Cheyenne). Their service territories include portions of Arizona, Colorado, Kansas, Michigan, Minnesota, New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). , North Dakota North Dakota, state in the N central United States. It is bordered by Minnesota, across the Red River of the North (E), South Dakota (S), Montana (W), and the Canadian provinces of Saskatchewan and Manitoba (N). , Oklahoma, South Dakota South Dakota (dəkō`tə), state in the N central United States. It is bordered by North Dakota (N), Minnesota and Iowa (E), Nebraska (S), and Wyoming and Montana (W). , Texas, Wisconsin Texas is a town in Marathon County, Wisconsin, United States. It is part of the Wausau, WI Metropolitan Statistical Area. The population was 1,703 at the 2000 census. Geography According to the United States Census Bureau, the town has a total area of 116.7 km² (45. and Wyoming. Xcel Energy's regulated businesses also include Viking Gas Transmission Viking Gas Transmission is a natural gas pipeline which takes gas from TransCanada pipeline in Minnesota and brings it to Wisconsin. It is owned by ONEOK Partners. Its FERC code is 82. Company and WestGas InterState Inc. (WGI WGI World Games Inc WGI Winter Guard International WGI Within Grade Increase WGI Washington Group International, Inc. WGI Working Group on Informatics (United Nations) ), both interstate natural gas pipeline companies. Xcel Energy also owns or has an interest in a number of nonregulated businesses, the largest of which is NRG Energy, Inc., a publicly traded independent power producer. At June 30, 2001, Xcel Energy indirectly owned approximately 74 percent of NRG NRG Energy NRG NRG Energy, Inc. NRG Natural Resources Group NRG New Radiancy Group NRG Network Referral Group NRG Network Resource Grapher NRG Numerics Rapporteur Group NRG Neuroprosthetics Research Group NRG notional requirements generator . Xcel Energy owned 100 percent of NRG until the second quarter of 2000, when NRG completed its initial public offering. In addition to NRG, Xcel Energy's nonregulated subsidiaries include Utility Engineering (engineering, construction and design), Seren Innovations, Inc. (broadband telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. ), e prime inc. (natural gas marketing and trading), Planergy International, Inc. (energy management, consulting and demand-side management services) and Eloigne Company (acquisition of rental housing projects that qualify for low-income housing tax credits The Low Income Housing Tax Credit (LIHTC; often pronounced "lye-tech") is a tax credit created under the Tax Reform Act of 1986 (TRA86) that gives incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans. ). Note 2. Significant Factors Affecting Operating Results The following table summarizes the earnings per share contributions of Xcel Energy's businesses.
3 Mos. Ended 12 Mos. Ended
---------------- ---------------
6/30/01 6/30/00 6/30/01 6/30/00
------- ------- ------- -------
Utility before unusual items $ 0.40 $ 0.34 $ 1.95 $ 1.62
Special charges - merger costs 0.00 0.00 (0.44) 0.00
Regulatory decisions 0.03 0.00 0.03 0.00
Extraordinary items 0.00 (0.04) (0.02) (0.04)
------ ------ ------ -------
Total Utility $ 0.43 $ 0.30 $ 1.52 $ 1.58
Nonregulated before special charges 0.06 0.12 0.33 0.43
Special charges 0.00 0.00 (0.08) (0.07)
------ ------ ------ -------
Nonregulated subsidiaries 0.06 0.12 0.25 0.36
------ ------ ------ -------
Total EPS $ 0.49 $ 0.42 $ 1.77 $ 1.94
====== ====== ====== =======
EPS before unusual items $ 0.46 $ 0.46 $ 2.28 $ 2.05
====== ====== ====== =======
Special Charges Merger Impacts - Xcel Energy's earnings for the 12 months ended June 30, 2001, were reduced by 52 cents per share for special charges related to the merger to form Xcel Energy. During the third quarter and fourth quarter of 2000, Xcel Energy expensed pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern special charges of $241 million, or 52 cents per share, for costs related to the merger between NSP and NCE. Of these special charges, approximately 44 cents per share were associated with the costs of merging regulated operations and 8 cents per share were associated with merger impacts on nonregulated activities. Of these pretax special charges, $201 million, or 43 cents per share, was recorded during the third quarter of 2000, and $40 million, or 9 cents per share, was recorded during the fourth quarter of 2000. Xcel Energy completed the majority of its merger-related transition and integration activities in 2000 and expects to fully realize in 2001 and future years the operating synergies anticipated from the merger of NSP and NCE. Nonregulated Write-offs - Xcel Energy's earnings for the 12 months ended June 30, 2000, were reduced by special charges of 7 cents per share for the write-down of goodwill at Energy Masters International, whose operations have been combined with Planergy's, and a valuation write-down of Xcel Energy's investment in the publicly traded common stock of CellNet Data Systems, Inc., as discussed under Nonregulated Operations. Regulatory Decisions Conservation Incentive Recovery - Earnings for the second quarter and the 12 months ended June 30, 2001, were increased by 7 cents per share due to the reversal of the Minnesota Public Utilities Commission The Minnesota Public Utilities Commission (PUC) is the consumer protection agency in the U.S. state of Minnesota charged with the regulation of public utilities such as electric and telephone service. Its commissioners are appointed by the governor. (MPUC MPUC Maine Public Utilities Commission MPUC Minnesota Public Utilities Commission MPUC Mission Planning Users Conference ) decision to deny NSP-Minnesota recovery of 1998 lost margins, load management discounts and incentives associated with state-mandated programs for electric energy conservation. In June 1999, the Minnesota Public Utilities Commission (MPUC) denied NSP-Minnesota recovery of 1998 lost margins, load management discounts and incentives associated with state-mandated programs for electric energy conservation. Xcel Energy recorded a $35 million charge in 1999, which reduced earnings by 7 cents per share, based on this action. NSP-Minnesota appealed the MPUC decision and in December 2000, the Minnesota Court of Appeals reversed the MPUC decision. In January 2001, the MPUC appealed the lower court decision to the Minnesota Supreme Court The Minnesota Supreme Court is the highest court in the U.S. state of Minnesota and consists of seven members. The court was first assembled as a three-judge panel in 1849 when Minnesota was still a territory. . On Feb. 23, 2001, the Minnesota Supreme Court declined to hear the MPUC's appeal. During the second quarter of 2001, NSP-Minnesota filed with the MPUC a plan that carried out, among other things, the court's decision. On June 28, 2001, the MPUC approved the plan and issued an order to that effect shortly thereafter. As a result, the previously recorded liabilities of approximately $41 million (including carrying charges Payments made to satisfy expenses incurred as a result of ownership of property, such as land taxes and mortgage payments. Disbursements paid to creditors, in addition to interest, for extending credit. Consumer Protection laws require full disclosure of all carrying charges. ) for potential refunds to customers are no longer required and have been reversed as of June 30, 2001. This accounting adjustment increased second quarter revenue by approximately $35 million and increased allowance for funds used during construction (equity and debt) by approximately $6 million, increasing earnings by 7 cents per share. The revenue increase relates to the elimination of potential refunds of amounts previously billed and collected, and the other income represents reversal of accrued carrying charges through March 31, 2001. Postemployment Benefits - Earnings for the second quarter and the 12 months ended June 30, 2001, were decreased by 4 cents per share due to a Colorado Supreme Court The Colorado Supreme Court is the highest court in the U.S. state of Colorado. It consists of a Chief Justice and six Associate Justices. Powers and duties Appellate jurisdiction decision that resulted in a pretax write-off of $23 million of regulatory assets related to deferred postemployment benefit costs at PSCo. PSCo adopted accrual accounting Accrual Accounting An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions happen. Notes: for postemployment benefits under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 112 - "Employers Accounting for Postemployment Benefits" in 1994. The costs of these benefits were historically recorded on a pay-as-you- go basis and, accordingly, PSCo recorded regulatory assets in anticipation of obtaining future rate recovery of these costs. PSCo recovered its FERC FERC Federal Energy Regulatory Commission FERC FEMA Emergency Response Capability jurisdictional portion of these costs. PSCo requested approval to recover its Colorado retail natural gas jurisdictional portion in a 1996 retail rate case and its retail electric jurisdictional portion in the electric earnings test filing for 1997. In the 1996 rate case, the Colorado Public Utility Commission (CPUC CPUC California Public Utilities Commission CPUC Current Procurement Unit Cost ) allowed recovery of postemployment benefit costs on an accrual basis A method of accounting that reflects expenses incurred and income earned for Income Tax purposes for any one year. Taxpayers who use the accrual method must include in their taxable income any money that they have the right to receive as payment for services, once it , but denied PSCo's request to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. the regulatory asset. PSCo appealed this decision to the Denver District Court. In 1998, the CPUC deferred the final determination of the regulatory treatment of the electric jurisdictional costs pending the outcome of PSCo's appeals on the natural gas rate case. On Dec. 16, 1999, the Denver District Court affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the decision by the CPUC. On Jan. 31, 2000, PSCo filed a Notice of Appeal with the Colorado Supreme Court and in February 2001 presented oral arguments. On July 2, 2001, the Colorado Supreme Court affirmed the District Court decision. Accordingly, PSCo has written off $23 million of regulatory assets related to deferred postemployment benefit costs as of June 30, 2001. Extraordinary Items - Electric Utility Restructuring With the issuance of a final written order by the Public Utilities Commission of Texas (PUCT PUCT Public Utility Commission of Texas ) in May 2000, addressing the implementation of electric utility restructuring, SPS discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: regulatory accounting under SFAS 71 for the generation portion of its business during the second quarter of 2000. SPS' transmission and distribution business has continued to meet the requirements of SFAS 71, as that business is expected to remain regulated. During the second quarter of 2000, SPS wrote off its generation-related regulatory assets and other deferred costs totaling approximately $19.3 million. This resulted in an after-tax extraordinary charge of approximately $13.7 million against the earnings of Xcel Energy and SPS. During the third quarter of 2000, SPS recorded a charge of $8.2 million before tax, or $5.3 million after tax, related to the defeasance defeasance n. an antiquated word for a document which terminates the effect of an existing writing such as a deed, bond, or contract if some event occurs. DEFEASANCE, contracts, conveyancing. of first mortgage bonds. These extraordinary charges reduced Xcel Energy's earnings by 4 cents per share for the second quarter of 2000 and 2 cents per share for the third quarter of 2000. For more information on restructuring see Note 4 to the Financial Statements. Statement of Financial Accounting Standard (SFAS) 133 During the first quarter of 2001, Xcel Energy adopted SFAS 133 - "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 establishes accounting and reporting standards requiring that every derivative instrument Noun 1. derivative instrument - a financial instrument whose value is based on another security derivative legal document, legal instrument, official document, instrument - (law) a document that states some contractual relationship or grants some right (including certain derivative instruments embedded Inserted into. See embedded system. in other contracts) be recorded in the balance sheet as either an asset or liability and measured at its fair value. SFAS 133 requires that changes in the derivative instrument's fair value be recognized currently in earnings unless specific hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). criteria are met or specific exclusions are applicable. Special accounting for qualifying hedges allows a derivative instrument's gains and losses to offset related results on the hedged item in the income statement, to the extent effective, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. Xcel Energy's earnings for the second quarter of 2001 were decreased by approximately $12.5 million (net of minority interest and after tax), or 4 cents per share, primarily at NRG, due to the mark-to-market impacts of SFAS 133 on the valuation of derivative instruments. Xcel Energy's earnings for the 12 months ended June 30, 2001, were decreased by approximately $2.4 million (net of minority interest and after tax), or 1 cent per share, primarily at NRG, due to the mark-to-market impacts of SFAS 133 on the valuation of derivative instruments. The earnings impact for the adoption of SFAS 133 as of Jan. 1, 2001, was less than $1 million and is not being reported separately as a cumulative effect of accounting change due to immateriality im·ma·te·ri·al·i·ty n. pl. im·ma·te·ri·al·i·ties 1. The state or quality of being immaterial. 2. Something immaterial. Noun 1. . Utility Operations Estimated Impact of Temperature Changes on Regulated Earnings - Xcel Energy analyzes the approximate effect of variations from historical average temperatures on actual sales levels. The following summarizes the estimated impact of temperature variations on actual utility operating results (in relation to sales under normal weather conditions).
Increase (Decrease)
------------------------------------------
2001 2000 2001
Earnings per Share for the vs. vs. vs.
Period ended June 30: Normal Normal 2000
--------------------- ------ ------ ----
Quarter Ended ($0.01) ($0.02) $0.01
12 Months Ended $0.09 ($0.12) $0.21
Sales Growth - The following table summarizes Xcel Energy's regulated growth for actual electric and gas sales for the three-month and 12-month periods ended June 30, 2001, compared with the same periods in 2000. Sales for the 12 months ended for June 30, 2000, include the impact of an extra day of sales due to leap year leap year: see calendar. .
Second Quarter 12 month Ended
-------------- --------------
Actual Actual
------ ------
Electric Residential 0.6% 6.1%
Electric Commercial & Industrial 4.2% 2.6%
Total Retail Electric Sales 3.3% 3.6%
Electric Sales for Resale 23.0% (1.2)%
Total Firm Gas Sales 8.8% 20.3%
Total Gas Sales (6.3)% 8.4%
Trading and Other Energy Margins - Electric and gas trading margins (representing revenues from proprietary trading Proprietary Trading When a firm trades for direct gain instead of commission dollars. Essentially, the firm has decided to profit from the market rather than commissions from processing trades. at PSCo and natural gas trading at e prime net of costs) increased approximately $5 million for the second quarter of 2001 and approximately $77 million for the 12 months ended June 30, 2001, compared with the same periods in 2000. The increase reflects an expansion of Xcel Energy's trading operation and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions, including strong prices in the western markets, particularly before the establishment of pricing caps. It is not expected that trading margins in the second half of 2001 will be as strong, due to a decline in the forward price curve. Electric utility margins (represents utility revenues net of fuel and purchased power costs) increased approximately $66 million for the second quarter of 2001 and approximately $242 million for the 12 months ended June 30, 2001, compared with the same periods in 2000. The increase reflects more favorable temperatures, retail sales growth, an expansion of Xcel Energy's wholesale operations and favorable market conditions. Retail revenue and margin were reduced by approximately $6 million in the second quarter of 2001 and by approximately $12 million for the 12-month ended June 30, 2001, due to rate reductions in various jurisdictions that were agreed to as part of the merger approval process. Other Operating and Maintenance Expenses - Utility - Utility operating and maintenance expense for the second quarter of 2001 increased by approximately $17 million, or 4.9 percent, compared with the second quarter of 2000. The change is largely due to increased transmission costs from the Southwest Power Pool The Southwest Power Pool (SPP) is the oldest North American reliability organization still in operation, having originally formed in 1941 when eleven power companies cooperated to ensure that an aluminum factory would receive reliable power as it worked to assist the US war effort (which are offset in electric revenue), increased costs due to customer growth, timing of plant outages and the expansion of Xcel Energy's energy marketing operation. Utility operating and maintenance expense for the 12 months ended June 30, 2001, increased by approximately $75.9 million, or 5.6 percent, compared with the same period in 2000. The change is largely due to increased transmission costs from the Southwest Power Pool (which are offset in electric revenue), increased bad debt reserves, higher performance-based incentive costs for 2000, increased costs due to customer growth, timing of plant outages, start-up costs to establish the Nuclear Management Co. and the expansion of Xcel Energy's energy marketing operation. Nonregulated Operations The following table summarizes the earnings-per-share contributions of Xcel Energy's nonregulated businesses.
3 Mos. Ended 12 Mos. Ended
----------------- -----------------
6/30/01 6/30/00 6/30/01 6/30/00
------- ------- ------- -------
NRG Energy Inc. $0.11 $0.13 $0.49 $0.32
Yorkshire Power 0.00 0.02 0.04 0.19
Seren Innovations Inc. (0.02) (0.02) (0.08) (0.05)
e prime 0.02 0.00 0.00 (0.01)
Planergy International (0.02) 0.00 (0.09) (0.06)
Financing Costs & Preferred
Dividends (0.02) (0.02) (0.09) (0.07)
Other (0.01) 0.01 (0.02) 0.04
-------- -------- -------- -------
Total Nonregulated $0.06 $0.12 $0.25 $0.36
======== ======== ======== =======
NRG - NRG's second quarter earnings were reduced by 3 cents per share due to the mark-to-market impacts of SFAS 133 on the valuation of derivative instruments. NRG's earnings for the second quarter of 2001 and the 12 months ended June 30, 2001, benefited from increased electric revenues resulting from recently acquired generation assets. NRG's earnings were also influenced by increased demand for electricity, market dynamics, strong performance from existing assets and higher market prices for electricity. The NRG earnings for the second quarter of 2001 and the 12 months ended June 30, 2001 in this report exclude earnings of approximately 4 cents per share and 14 cents per share, respectively, related to minority shareholder interests. In comparison, NRG earnings for the second quarter of 2000 and the 12 months ended June 30, 2000, in this report exclude earnings of approximately 2 cents per share for both periods, related to minority shareholder interests. Yorkshire Power - During February 2001, Xcel Energy reached an agreement to sell the majority of its investment in Yorkshire Power to Innogy Holdings plc. As a result of this sales agreement, Xcel Energy did not record any equity earnings from Yorkshire Power after January 2001. In April 2001, Xcel Energy closed the sale of Yorkshire Power. Xcel Energy retains an interest of approximately 5 percent in Yorkshire Power to comply with pooling-of-interests accounting requirements associated with the merger of NSP and NCE in 2000. Xcel Energy received approximately $366 million for the sale, which approximated the book value of Xcel Energy's investment. Xcel Energy used the proceeds of the sale to pay down short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. and eliminate the need for an equity issuance In financial markets, an Equity Issuance is the sale of new equity or "stocks" by a firm to investors. Equity Issuance can involve a private sale, in which the transaction between investors and the firm takes place directly, or publicly, in which case the firm has to planned for the second half of 2001. Seren - As expected, Seren's construction of its broadband communications network The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. in Minnesota and California resulted in higher losses for the 12 months ended June 30, 2001. Seren is constructing a combination cable television, telephone and high-speed Internet See broadband. access system in two locations: St. Cloud, Minn. and Contra Costa Contra Costa can refer to:
e prime - e prime's strong second quarter results reflect capitalizing on a favorable basis differential opportunities utilizing gas transmission and gas storage positions. These favorable market conditions may not continue to exist during the remainder of 2001 in the volatile natural gas markets. e prime results for the 12 months ended June 30, 2001, were reduced by special charges of 2 cents per share for contractual obligations and other costs associated with post-merger changes. Planergy International - During the second quarter of 2001, Planergy recorded a loss of nearly 2 cents per share largely due to lower margins on performance contracts, higher project development expenses and final costs related to the consolidation of Planergy and EMI (ElectroMagnetic Interference) An electrical disturbance in a system due to natural phenomena, low-frequency waves from electromechanical devices or high-frequency waves (RFI) from chips and other electronic devices. Allowable limits are governed by the FCC. operations. Planergy's results for the 12 months ended June 30, 2001, were reduced by special charges of 4 cents per share for the write-offs of goodwill and project development costs at Planergy. During the third quarter of 2000, the operations of Planergy and EMI, both wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Xcel Energy, were combined and now do business as Planergy International. As a result of this merger, Planergy International reassessed its business model and made a strategic realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. , which resulted in the write-off of $22 million (before tax) of goodwill and project development costs. In addition, Planergy's results for the 12 months ended June 30, 2000, were reduced by a special charge of 4 cents per share to write off goodwill that was recorded for two acquisitions. EMI wrote off approximately $17 million of goodwill (before tax) during the fourth quarter of 1999. Financing Costs and Preferred Dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) - Nonregulated results include interest expense and preferred dividend costs, which are incurred at the Xcel Energy and intermediate holding company levels and are not directly assigned to individual subsidiaries. Other - The Other Nonregulated results for the 12 months ended June 30, 2001, were reduced by special charges of 2 cents per share. These special charges include $10 million (before tax) in asset write-downs and losses resulting from various other nonregulated business ventures that are not being pursued after the merger. Other Nonregulated results for the 12 months ended June 30, 2000, reflect favorable results at Utility Engineering and Eloigne and foreign tax credits at Xcel Energy International. These increases were partially reduced by special charges of 3 cents per share in the fourth quarter of 1999 for a valuation write-down of Xcel Energy's investment in the publicly traded common stock of CellNet Data Systems, Inc. Note 3. NRG Acquisitions Completed Asset Acquisitions Audrain - In June 2001, NRG purchased an approximately 640-megawatt, natural gas-fired power plant in Audrain County, Missouri Audrain County is a county located in the U.S. state of Missouri. As of 2000, the population was 25,853. Its county seat is Mexico6. The county was organized in 1836. Tradition says the county was named for settler Samuel Audrain. , from Duke Energy North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Operation of the Audrain facility has been suspended due to problems with the plant's transformers. The transformers are currently under repair and NRG expects that commercial operation of the plant will resume in the third quarter of 2001. Brazos Valley The Brazos Valley is a region in the U.S. state of Texas (Central Texas) consisting of Brazos County, Robertson County, Grimes County, Washington County, Burleson County, Madison County, and Leon County, with Brazos County and the cities of College Station and Bryan at its center. - In June 2001, NRG closed on the construction financing for a 633-megawatt, gas-fired power plant in Texas that NRG will build, operate and manage. At the time of the closing, NRG also became the 100 percent owner of the project by purchasing STEAG Power LLC's 50-percent interest in the project. NRG estimates that its investment in the project will total approximately $170 million. NRG expects the project to begin commercial operation in February 2003. Conectiv - In June 2001, NRG purchased 1,081 megawatts of interests in power generation plants from a subsidiary of Conectiv for approximately $643 million. NRG acquired a 100-percent interest in the 784-megawatt, coal-fired Indian River Indian River, lagoon, c.100 mi (160 km) long, E Fla., parallel to the east coast from N of Titusville to Stuart. Along the lagoon a variety of citrus and vegetable products are grown and transported by small boats to towns on its waterway and those further inland. Generating Station located in Delaware and in the 170-megawatt, oil-fired Vienna Generating Station located in Maryland. In addition, NRG acquired 64 megawatts of the 1,711-megawatt, coal-fired Conemaugh Generating Station Conemaugh Generating Station is a power plant at Seward, Pennsylvania. It has 2 305 metre tall chimneys. External links
• and 63 megawatts of the 1,711-megawatt, coal-fired Keystone key·stone n. 1. Architecture The central wedge-shaped stone of an arch that locks its parts together. Also called headstone. 2. The central supporting element of a whole. Generating Station, both are located near Pittsburgh, Pa. PowerGen - In June 2001, NRG purchased a 389-megawatt, gas-fired power plant and a 116-megawatt, thermal power plant, both of which are located in Hungary, from PowerGen. In April 2001, NRG also purchased PowerGen's interest in Saale Energie GmbH and MIBRAG BV. By acquiring PowerGen's interest in Saale Energie, NRG increased its ownership interest in the 960-megawatt coal-fired Schkopau power station The Schkopau Power Station is a German lignite-fired power station in the proximity of the local part Korbetha of the municipality Schkopau in the district Merseburg Querfurt (Saxonia-Anhalt). The E.ON AG belongs and has an electrical output distributed of 900 megawatts on two blocks. located in Germany from 200 megawatts to 400 megawatts. By acquiring PowerGen's interest in MIBRAG, consisting primarily of two lignite lignite (lĭg`nīt) or brown coal, carbonaceous fuel intermediate between coal and peat, brown or yellowish in color and woody in texture. mines and three power stations in Germany, NRG increased its ownership of MIBRAG from 33.3 percent to 50 percent. NRG paid approximately $190 million to PowerGen for all of these interests. Completed Projects Big Cajun I Expansion Project - In June 2001, NRG completed an approximately 240-megawatt expansion project at the site of its Big Cajun I facility in Louisiana. The expansion project cost approximately $69 million. Chowchilla - In June 2001, NRG announced the opening, by its subsidiary NEO Corporation, of the Chowchilla II Power Plant, a 49-megawatt plant. Pending Asset Acquisitions Conectiv - In June 2001, NRG extended purchase agreements that it had entered into with a subsidiary of Conectiv to acquire 794 megawatts of coal and oil-fired electric generating capacity and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. in New Jersey and Pennsylvania, including an additional 66 megawatts of the Conemaugh Generating Station and an additional 42 megawatts of the Keystone Generating Station. NRG expects the acquisition to close in the third quarter of 2001 following approval of the New Jersey Board of Public Utilities The New Jersey Board of Public Utilities (NJBPU) is a regulatory authority in New Jersey charged with the responsibility of seeing that "safe, adequate, and proper utility services are provided at reasonable rates for customers in New Jersey. . Indeck - In May 2001, NRG signed a purchase agreement to acquire an approximately 2,255-megawatt portfolio of operating projects and projects in advanced development that are located in Illinois and upstate New York Upstate New York is the region of New York State north of the core of the New York metropolitan area. It has a population of 7,121,911 out of New York State's total 18,976,457. Were it an independent state, it would be ranked 13th by population. from Indeck Energy Services, Inc. Approximately 402 megawatts are currently in operation and NRG expects that an additional $1.3 billion will be required to complete construction of the projects. NRG expects the acquisition to close in the third quarter of 2001. Narva Power - In August 2000, NRG signed an agreement with Eesti Energia Eesti Energia AS is an Estonian state-owned energy company engaged in the production, transmission, distribution and sale of electric and thermal power, oil-shale mining, and construction and maintenance of energy systems. , the Estonian state-owned electric utility, to purchase for approximately $65.5 million a 49-percent stake in Narva Power, the owner and operator of the oil shale-fired Eesti and Balti balti Noun a spicy Indian dish served in a metal dish [probably from the Baltistan region of Pakistan] power plants, located near Narva, Estonia. The plants have a combined capacity of approximately 2,700 megawatts. NRG is working to close the acquisition in the second half of 2001. Bridgeport Harbor and New Haven Harbor New Haven Harbor is an inlet on the north side of Long Island Sound in the state of Connecticut in the United States. - In December 2000, NRG signed asset purchase agreements to acquire the 585-megawatt, coal-fired Bridgeport Harbor Station and the 466-megawatt, oil and gas-fired New Haven Harbor Station in Connecticut for approximately $325 million. The closing of this acquisition has been delayed as NRG addresses certain market power issues raised by federal and state regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . NRG is involved in ongoing discussions to resolve these issues and currently expects the acquisition to close in the third quarter of 2001. Meriden - In December 2000, NRG signed a purchase agreement to acquire a 540-megawatt, natural gas-fired generation facility being developed in Connecticut, for a purchase price of approximately $25 million. NRG expects to close the acquisition in the third quarter of 2001. NRG estimates it will cost approximately $384 million to complete construction of the plant, which has a planned commercial operation date of June 2003. McClain - In May 2001, NRG signed a purchase agreement to acquire Duke Energy's 77-percent interest in the McClain Energy Generating Facility, located in Oklahoma, for approximately $283 million. The Oklahoma Municipal Power Authority owns the remaining 23-percent interest. The 500-megawatt, natural-gas fired McClain facility is in the final stage of construction and is expected to begin commercial operation during the third quarter of 2001. NRG expects to close the acquisition in the third quarter of 2001. Note 4. Restructuring and Regulation SPS Restructuring - On June 15, 2001, the Governor of Texas signed legislation postponing the deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. and restructuring of SPS until 2007. This legislation amended the 1999 legislation, Senate Bill No. 7 (SB-7), which provided for retail electric competition beginning January 2002. Under the requirements of SB-7 the Public Utility Commission of Texas (PUCT) had previously approved SPS' business separation and power plant divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). plans associated with implementing customer choice. Under the newly-adopted legislation, prior PUCT orders issued in connection with the restructuring of SPS will be considered null A character that is all 0 bits. Also written as "NUL," it is the first character in the ASCII and EBCDIC data codes. In hex, it displays and prints as 00; in decimal, it may appear as a single zero in a chart of codes, but displays and prints as a blank space. and void. In addition, under the new legislation, SPS is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to recover all reasonable and necessary expenditures made or incurred before Sept. 1, 2001, to comply with SB-7. As required, SPS plans to file an application during the fourth quarter of 2001, requesting a rate rider to recover these costs incurred preparing for customer choice. In March 2001, the state of New Mexico enacted legislation that delayed customer choice until 2007 and amended the Electric Utility Restructuring Act of 1999. SPS has requested recovery of its costs incurred to prepare for customer choice in New Mexico. A decision on this and other matters is pending before the New Mexico Public Regulation Commission (NMPRC NMPRC New Mexico Public Regulation Commission NMPRC Northwest Missouri Psychiatric Rehabilitation Center (Saint Joseph, Missouri) NMPRC National Meat and Poultry Regulations and Code (Canada) ). As a result of these recent legislative developments, SPS will reapply Re`ap`ply´ v. t. & i. 1. To apply again. reapply vi → volver a presentarse, hacer or presentar una nueva solicitud the provisions of Statement of Financial Accounting Standards No. 71 (SFAS 71), "Accounting for the Effects of Certain Types of Regulation" for its generation business during the second quarter of 2001. More than 95 percent of SPS' retail electric revenues are from operations in Texas and New Mexico. Because of the delays to electric restructuring passed by Texas and New Mexico, SPS' previous plans to implement restructuring, including the divestiture of generation assets, have been abandoned. Accordingly, SPS will now continue to be subject to rate regulation under traditional cost of service regulation, consistent with its past accounting and ratemaking rate·mak·ing n. The practice of establishing rates of payment, as for public transportation or utilities. rate practices. At this time, management is uncertain as to whether restructuring will be completed in 2007 or later and as to what the transition plan to competition will be at that time. SPS does not expect to recognize any earnings impact for financial reporting purposes as a result of its reapplication Re`ap`pli`ca´tion n. 1. The act of reapplying, or the state of being reapplied. of SFAS 71 during 2001. In 2000, SPS recognized extraordinary charges of approximately $19 million after taxes as a direct result of discontinuing the application of SFAS 71. Through the second quarter of 2001, SPS has incurred more than $40 million of pretax costs associated with restructuring, a portion of which has been deferred based on expected regulatory recovery. Cheyenne Purchased Power Costs - For the past 37 years, Cheyenne has purchased all energy requirements from PacifiCorp. Cheyenne's full-requirements power purchase agreement with PacifiCorp expired on Feb. 24, 2001. During 2000, as contract details for a new agreement were being finalized See finalization. between Cheyenne and PacifiCorp, energy supply conditions and market prices in the western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River West Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century dramatically changed. Cheyenne was unable to execute a new agreement with PacifiCorp for the prices and terms it had been negotiating. PSCo is currently supplying all of Cheyenne's power requirements, although the rates under this agreement have not yet been approved by the Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. (FERC). In March 2001, Cheyenne requested an increase in retail electric rates to provide for recovery of increasing power costs. As a result of the significant increase in electric energy costs since late February 2001, Cheyenne under recovered its costs under its electric cost adjustment (ECA ECA See: Export Credit Agency ) mechanism. On May 25, 2001, the Wyoming Public Service Commission (WPSC WPSC Wisconsin Public Service Commission ) approved a Stipulation An agreement between attorneys that concerns business before a court and is designed to simplify or shorten litigation and save costs. During the course of a civil lawsuit, criminal proceeding, or any other type of litigation, the opposing attorneys may come to an agreement Agreement between Cheyenne and intervenors in connection with a proposed increase in rates charged to Cheyenne's retail customers to recover increased power costs. The Stipulation provides for an ECA rate structure with a fixed energy supply rate for Cheyenne's customers through 2003 (an estimated combined capacity and energy rate of approximately $54 per megawatt-hour); the continuation of the ECA with certain modifications, including the amortization through December 2005 of unrecovered costs during 2001 up to the agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy fixed supply rates; and an agreement that Cheyenne's energy supply needs will be provided, in whole or in part, by PSCo in accordance with wholesale tariff rates to be approved by FERC. The estimated retail rate increases under the Stipulation would recover an additional $18 million (in comparison to current rate levels) through the remainder of 2001 and $28 million for each of the years 2002 and 2003. In 2004 and 2005, Cheyenne will return to requesting recovery of its actual costs incurred plus the outstanding balance of any deferral deferral - Waiting for quiet on the Ethernet. from earlier years. New cost levels consistent with the Stipulation Agreement will be reflected in Cheyenne's expenses, and in deferred costs based on current ECA recovery levels, with an effective date of June 1, 2001, and retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a adjustments back to the date of the increase in costs on Feb. 25, 2001. The power costs underlying the Stipulation Agreement are based on wholesale tariff rates filed with FERC in June 2001. FERC action on the new tariffs is anticipated within 60 days of filing. NSP-Wisconsin Electric Rate Request - In May 2001, NSP-Wisconsin filed an application with the Public Service Commission of Wisconsin (PSCW PSCW Public Service Commission of Wisconsin PSCW Politieke Sociale en Culturele Wetenschappen (Political, Social, and Cultural Sciences) ) requesting an increase in Wisconsin retail electric rates due to significant increases in power supply costs. This increase is necessary to recover fuel and purchased power costs from wholesale suppliers whose commodities are priced at unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. market prices. In addition, rising gas prices and the potential volatility of wholesale electric prices have combined to increase the cost of power supply. On June 28, 2001, the PSCW approved an interim fuel cost surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. , which is expected to increase NSP-Wisconsin's electric revenue by approximately $5.6 million for the last six months of 2001. Note 5. Commitments and Contingencies California Power Market - NRG's California generation assets consist primarily of its interests in the Crockett and Mt. Poso facilities and a 50-percent interest in West Coast Power LLC, formed in 1999 with Dynegy Inc. The West Coast Power facilities sold power through the California Power Exchange (PX) and the California Independent System Operator (ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. ) to Pacific Gas and Electric Company
The Pacific Gas and Electric Company (PG&E) , (NYSE: PCG), is the utility that provides natural gas and electricity to most of Northern California. (PG&E), Southern California Edison Southern California Edison (or SCE Corp), the largest subsidiary of Edison International (NYSE: EIX), is the primary electricity supply company for much of Southern California. It provides 11 million people with electricity. Company (SCE SCE (in Scotland) Scottish Certificate of Education SCE n abbr (= Scottish Certificate of Education) → Schulabschlusszeugnis in Schottland ) and San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. Gas and Electric Company (SDG&E). Currently, the West Coast Power facilities sell power through the California ISO to the California Department of Water Resources History 1850-1875 California recognizes many types of water rights. These rights have developed with the State over time. Prior to the Treaty of Guadalupe Hidalgo, signed in 1848, California was part of Mexico. (CDWR CDWR California Department of Water Resources ). Crockett, Mt. Poso and certain other NRG California facilities also sell directly to PG&E, SCE and SDG&E. The combination of rising wholesale electric prices, increases in the cost of natural gas, the scarcity Scarcity The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently. of hydroelectric power hydroelectric power: see power, electric; water power. hydroelectric power Electricity produced from generators driven by water turbines that convert the energy in falling or fast-flowing water to mechanical energy. and regulatory limitations on the rates that PG&E and SCE may charge their retail customers caused both PG&E and SCE to default in their payments to the California PX, the California ISO and other suppliers, including NRG. In March 2001, the California PX filled for Chapter 11 bankruptcy and in April 2001, PG&E filed for Chapter 11 bankruptcy. In March 2001, affiliates of West Coast Power entered into a contract with the CDWR in which the affiliates agreed to sell up to 1,000 megawatts to the CDWR for the remainder of 2001 and up to 2,300 megawatts from January 2002 through December 2004, any of which may be resold by the CDWR to utilities such as SCE, PG&E and SDG&E. The ability of the CDWR to make future payments is subject to the CDWR having a continued source of funding, whether from legislative or other emergency appropriations, from a bond issuance or from amounts collected from SCE, PG&E and SDG&E. As a result of the situation in California, NRG's interests in California are exposed to the heightened risk of delayed payments and/or non-payment regardless of whether the sales are made directly to PG&E, SCE or SDG&E or to the California ISO or the CDWR. NRG's share of the net amounts owed to its California affiliates by the California PX, the California ISO and the three major California utilities totaled approximately $218 million as of June 30, 2001. This amount reflects NRG's share of (a) total amounts owed to our California affiliates of $371 million, less (b) amounts that are currently treated as disputed revenues and are not recorded as accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying in the financial statements of NRG's California affiliates, and reserves taken against accounts receivable that have been recorded in the financial statements, which together totaled $153 million. NRG believes that it will ultimately collect in full the net amount of $218 million owed to its California affiliates; however, if some form of financial relief or support is not provided to PG&E and SCE, the collectibility of this amount will become more questionable in terms of both timing and amount. With respect to disputed revenues, these amounts relate to billing disputes arising in the ordinary course of business and to disputes that have arisen as a result of the California ISO and the FERC imposing various revenue caps on the wholesale price of electricity. None of these disputed revenues will be recorded until the issue is resolved. Since the date of the PG&E bankruptcy filing, PG&E has been paying NRG's Crockett and Mt. Poso affiliates on a current basis. The delayed collection of receivables owed to West Coast Power resulted in a covenant default under its credit agreement. West Coast Power has entered into a forbearance Refraining from doing something that one has a legal right to do. Giving of further time for repayment of an obligation or agreement; not to enforce claim at its due date. A delay in enforcing a legal right. agreement with its lenders in connection with the covenant default. In addition, NRG's Crockett affiliate was notified by its lenders that it has incurred a covenant default under its loan agreement. As a result, NRG has reclassified the long-term portion of the Crockett debt to current. Defaults under the Crockett and West Coast Power credit agreements do not trigger defaults under any of NRG's corporate-level financing debt securities or borrowing arrangements. FERC has jurisdiction over sales for resale of electricity in the California wholesale power markets. In March 2001, FERC issued orders that presumptively pre·sump·tive adj. 1. Providing a reasonable basis for belief or acceptance. 2. Founded on probability or presumption. pre·sump approved prices up to $273 per megawatt-hour during January 2001 and $430 per megawatt-hour during February 2001. The orders direct electricity suppliers either to refund a portion of their January and February sales or justify prices charged above these approved prices. The orders, if finalized, could require West Coast Power to refund approximately $45 million in revenues from January and February, of which NRG's share would be approximately $22.5 million. Dynegy Power Marketing, Inc., as the power marketer for West Coast Power, has submitted information to justify each component of the prices it charged that were in excess of the presumptively approved prices.
XCEL ENERGY INC.
Unaudited Earnings Release Summary
All dollars in thousands, except earnings per share
3 months ended June 30 2001 2000
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Operating revenue $ 3,699,000 $2,474,000
Net income $ 168,000 $ 143,000
Earnings available for common shareholders $ 167,000 $ 142,000
Average shares - common and potentially
dilutive (1000's) 344,000 338,000
Earnings per share - diluted
Earnings before unusual items $0.46 $0.46
Special charges $0.00 $0.00
Regulatory decisions $0.03 $0.00
Extraordinary item $0.00 ($0.04)
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Total earnings per share $0.49 $0.42
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12 months ended June 30 2001 2000
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Operating revenue $14,810,000 $9,156,000
Net income $ 608,000 $ 653,000
Earnings available for common shareholders $ 603,000 $ 649,000
Average shares - common and potentially
dilutive (1000's) 341,000 335,000
Earnings per share - diluted:
Earnings before unusual items $2.28 $2.05
Special charges ($0.52) ($0.07)
Regulatory decisions $0.03 $0.00
Extraordinary item ($0.02) ($0.04)
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Total earnings per share $1.77 $1.94
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Return on Equity, before unusual items 13.3% 12.6%
Return on Equity - total 10.4% 12.2%
Book value $17.58 $16.44
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