Natural Gas Prices Have Mixed Effect on Edison International

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Researched by Industrial Info Resources (Sugar Land, Texas)--Edison International (NYSE:EIX) (Rosemead, California) recently announced earnings results for the fourth quarter of 2008. Edison International is the parent company of the electric utility Southern California Edison (SCE) and power-generation business Edison Mission Group (EMG). Quarterly earnings for the company were up 3% from 4Q07, moving from $211 million to $217 million.

Earnings in the company's Southern California Edison segment were $141 million, up 17.5% from last year. While some of this gain was due to energy-efficiency incentives paid by the California Utilities Public Commission, a large part of the increased profits were from increased customer rates coupled with plunging natural gas prices.

Unfortunately, the falling gas prices were not entirely good news for the company. "The collapse in natural gas prices has been stunning both in its extent and speed," said Chairman, President and CEO Ted Craver. "While it has been helpful to SCE and its customers, it has hurt EMG's earnings." Core earnings in the Edison Mission Group segment fell 18% year over year. While 4Q07 brought earnings of $99 million, the fourth quarter yielded only $81 million in 2008.

Industrial Info is currently monitoring 39 current or planned projects involving Edison International worth an estimated $10.3 billion, including more than $2.9 billion of windfarm projects. Edison seems intent on carrying through with currently planned wind projects, even if future projects are more uncertain. "EMG's wind development focus remain[s] on projects that will utilize the 942 megawatts of turbines we have in inventory or will take delivery on through next year," said Craver. "Availability of project financing continues to be an important factor in committing to new construction projects beyond those currently planned."

Construction of the grassroot Walnut Ridge Windfarm in Illinois is currently scheduled to begin in October of this year. Phase I of the project will consist of the installation of 210 megawatts (MW) of capacity and has an estimated total investment value of $357 million. Phase II, which is scheduled to kick off in early 2010, will add another 75 to 150 MW of wind power capacity. Information on these and other projects in the Power Industry can be found in Industrial Info's http://www.industrialinfo.com/marketcoverage.jsp?pagerequest=marketcoverage01 Power Tracker.

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