NV Energy Sees Solid Improvement in 2012, Continues with Major Transmission Development Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--NV Energy Incorporated (NYSE:NVE) (Reno, Nevada), the holding company for energy subsidiaries Nevada Power Company and Sierra Pacific Power Company, reported significantly improved income in fourth-quarter and full-year 2012, aided by hot weather and an improving Nevada economy. Net income was reported to be $17.16 million for the quarter, compared with a net loss of $25.25 million in fourth-quarter 2011. For the year, net income was $321.95 million, compared with income of $163.43 million in 2011.

Total operating revenues stood at $600.57 million for the quarter, a 1.48% decrease from the same period in 2011, and $2.98 billion for the year, a 1.22% increase from 2011. Lower fourth-quarter revenues were attributed partly to milder-than-expected weather, although higher-than-average temperatures proved beneficial to the company's bottom line for the full year. NV Energy incurred $20.9 million pre-tax in regulatory adjustments and reserves in fourth-quarter 2011 that it did not see in the final quarter of 2012.

Improving employment in Nevada also boosted NV Energy's earnings, with unemployment declining from to 10.2% from 13% in December 2011. The percentage of accounts that are "low use," indicated vacant homes, has fallen to its lowest level since 2008.

During the year, NV Energy added more than 300 megawatts to its renewable energy portfolio; recommenced tower construction for the One Nevada transmission line project, which will link northern and southern systems in Nevada to provide greater reliability; and provided more than 90% of its customers with smart meters.

Industrial Info is tracking $739 million in active projects involving NV Energy, including the $397 million construction of transmission lines east of Las Vegas. The project involves building two 500 kilovolt/230-kilovolt, 1,500-megavolt ampere substations; a new, 10-mile overhead, single-pole transmission line; and two new, 230-kilovolt lines. Sturgeon Electric (Salt Lake City, Utah) is serving as contractor for the transmission line, and Wilson Construction Company (Rancho Cordova, California) is serving as contractor for the substations.

"Looking at the increase in gross margin, by far the biggest contributor was the rate case decision that became effective on January 1, 2012," said Jonathan Halkyard, the executive vice president and chief financial officer of NV Energy, in a conference call. "That rate decision, which enabled us to begin recovering the cost of the new Harry Allen generating unit, benefited quarterly earnings."

Although NV Energy's electric businesses reported higher overall sales for the year, they reported declines in the fourth quarter, as did the gas business for both periods:

• Residential electric sales were reported to be 2.03 million megawatt-hours (MWh) for the quarter, a 1.7% decrease from fourth-quarter 2011, and 11.38 million MWh for the year, a 5.84% increase from 2011. Gas sales were reported to be 2.91 million decatherms (Dth) for the quarter, a 10.87% decrease from the same period in 2011, and 8.53 million Dth for the year, an 11.06% decrease from 2011.
• Commercial electric sales were reported to be 1.72 million MWh for the quarter, a decrease of less than 1% from fourth-quarter 2011, and 7.43 million MWh for the year, a 3.12% increase from 2011. Gas sales were reported to be 1.26 million Dth for the quarter, an 11.71% decrease from the same period in 2011, and 4.2 million Dth for the year, a 9.8% decrease from 2011.
• Industrial electric sales were reported to be 2.53 million MWh for the quarter, basically unchanged from fourth-quarter 2011, and 10.37 million MWh for the year, a 1.52% increase from 2011. Gas sales were reported to be 446,000 Dth for the quarter, a 9.9% decrease from the same period in 2011, and 1.32 million Dth for the year, a 14.27% decrease from 2011.

Michael Yackira, the president and chief executive officer of NV Energy, said in the conference call that the One Nevada project is expected to be completed and in service by the end of 2013. The finished project will give NV Energy the ability to jointly dispatch its power plant throughout the state and transmit renewable energy projects that are being developed. The company also plans to continue its "NV Energize" program to distribute smart meters.

"Our new guidance reflects projected customer growth of 1.2%, but because we assume normal weather, gross margins should be down slightly in 2013 as compared to 2012," Halkyard said in the conference call.

For more information, visit Industrial Info's North American Power Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.