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Sempra Continues Improved Results


Sempra Energy on Thursday reported another quarter of higher earnings and revenue, a sharp contrast to California's bigger and beleaguered investor-owned utilities.

Although California's electricity crisis has pushed Southern California Edison and Pacific Gas & Electricity into insolvency--and PG&E into U.S. Bankruptcy Court--the parent of San Diego Gas & Electric and Southern California Gas continues to post improved results on the strength of its non-utility businesses.

Net income for the period ended June 30 rose 25% to $137 million, or 66 cents a share, up $25 million, or 55 cents, earned a year ago, the San Diego-based utility holding company said. Revenue jumped 40% to $2.1 billion. Pretax operating income rose 24% to $291 million.

Sempra's earnings came in just ahead of the 65-cent average estimate of analysts surveyed by First Call/Thomson Financial.

"Our strong second-quarter performance is primarily the result of our efforts to accelerate growth through new businesses," Stephen L. Baum, Sempra's chairman, chief executive and president, told analysts in a conference call.

Sempra is in a vastly different position than Edison International and PG&E Corp. because its electric utility arm was able to avoid the deep financial woes afflicting their respective Southern California Edison and Pacific Gas & Electric utilities.

SDG&E was first to sell its power plants two years ago and thus was freed from a rate freeze. That in turn allowed the utility to pass along to customers the soaring costs of electricity beginning last summer. The state Legislature eventually rolled back and capped the rates for SDG&E customers, but promised the utility it would be allowed to recover those losses.

Edison and PG&E, however, continued to accumulate staggering debts because their retail rate freezes remained in place.

In contrast, Sempra is solvent, with $1.5 billion in cash and $1 billion in available credit, Baum said.

The performance of its utilities was lackluster, with Southern California Gas earning $47 million, unchanged from the second quarter of 2000, and SDG&E earning $37 million, down from $40 million in the year-ago period. But Sempra's unregulated businesses--including energy trading, power plant construction and operation, international electricity operations and energy services--turned in an overall strong performance, contributing 39% of the parent company's earnings.

Sempra's trading unit provided most of that profit, contributing $69 million to second-quarter net income compared with $40 million in the same quarter last year.

Sempra's stock gained 17 cents to close at $25.49 on the New York Stock Exchange.

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