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California

Reliant Sees Profit Double in 1st Quarter

April 17, 2001|From Bloomberg News

Reliant Energy Inc., the owner of Houston's utility and a power supplier in California and other states, said Monday that first-quarter earnings more than doubled on higher profit from energy-trading and natural-gas businesses.

Profit from operations rose to $273.5 million, or 94 cents a share, from $133.7 million, or 47 cents, a year earlier, Reliant spokeswoman Sandy Fruhman said. Revenue more than tripled to $13.3 billion.

Soaring power prices pushed California's largest utility, PG&E Corp.'s Pacific Gas & Electric unit, into Bankruptcy Court and may cost the state as much as $70 billion in electricity-buying costs this year, lawmakers estimate. Most of that money went to power sellers such as Reliant's trading unit, which had a first-quarter operating profit of $216 million compared with a $22 million loss a year earlier.

"It's driven principally by the way-over-average pricing environment in California," Jefferies & Co. analyst Paul Fremont said.

Reliant shares rose $1.46 to close at $47 on the New York Stock Exchange.

Houston-based Reliant said last year that it would sell 20% of its non-utility businesses, including wholesale power sales and energy trading, to the public by early this year and spin off the rest to shareholders. The $1.46-billion initial stock sale will take place early next month, Chief Executive Steve Letbetter said Monday.

Rival power sellers Enron Corp. and Dynegy Inc. are expected to follow Reliant later this week in reporting higher earnings.

Power prices along the California-Oregon border averaged more than $288 a megawatt hour in the quarter, more than nine times the year-earlier average.

The high prices put generators at risk of not collecting payment from utilities. Reliant set aside $38 million before taxes in the first quarter in case it can't collect money owed for California power sales.

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