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Edison Hit With Big Quarterly Loss

Energy: Though the firm says it has reversed cash drain this month, shortfall of $102 million leaves future uncertain.

July 21, 2001|JERRY HIRSCH | TIMES STAFF WRITER

Edison International piled up another big loss in the second quarter as it struggled to keep its Southern California Edison utility out of bankruptcy.

Rosemead-based Edison said Friday that it lost $102 million in the second quarter, or 31 cents a share, contrasted with a gain of $137 million, or 41 cents, in the same period a year earlier.

Through the first half of this year, Edison lost $719 million, contrasted with net income of $247 million in the same period a year earlier.

Much of Edison's losses in the latest quarter came in April and May, when the utility was unable to collect enough from consumers to cover its cost of energy.

In a conference call with Wall Street analysts, Edison executives said the utility spent about $100 million more on energy than it collected from ratepayers during the quarter, causing an after-tax charge of $63 million.

Lower energy prices and higher rates have reversed that trend this month, and the company once again is collecting more than it is spending on power, Jim Scilacci, chief financial officer for Southern California Edison, told the analysts.

The parent company's results also were hurt by an after-tax charge of $117 million from the sale of its Edison Select home security business to ADT Security Services and from the sale of its Edison Source subsidiary to the unit's management.

Revenue dipped to $2.63 billion for the quarter from $2.75 billion a year earlier.

One reason for the decline is that the utility sold 5.9% less electricity because of customers' conservation efforts and mild weather.

"The environment is incredibly difficult for them," said Argus Research analyst Jeffrey Gildersleeve. "Their customers are undergoing strict conservation programs to avoid blackouts, and that's obviously affecting utility sales."

Edison, meanwhile, gave conflicting signals as to the future of Southern California Edison, which has been saddled with $3.5 billion in debt during the last year as wholesale energy prices spiked and the utility couldn't recover its expenses through the rates it charges customers.

In Sacramento, one of Edison's top lobbyists circulated a letter to lawmakers saying the utility could be forced into bankruptcy if the Legislature failed to act to rescue the utility.

But in the call to Wall Street analysts, Theodore Craver Jr., Edison International's chief financial officer, declined to predict what would happen if the Legislature did not act before the start of its summer recess this weekend.

Later in the day, the state Senate voted to allow Edison to float a $2.5-billion bond issue to be repaid by ratepayers. That money--about $1 billion less than the company says it needs--would be used to repay creditors. The Assembly was still working on its version of a rescue plan late Friday.

Edison's main concern is that any plan would have to make the utility credit-worthy, so it could float a bond issue to pay off its debts over 15 years.

On Thursday, Edison's board voted to eliminate payment of the third-quarter dividend on its common stock, citing the effects of the state's energy crisis on the company's financial condition.

Shares of Edison fell 46 cents to close at $14.24 on the New York Stock Exchange on Friday.

*

Bloomberg News was used in compiling this report.

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