Reliant Energy Inc. reported reduced third quarter earnings Friday, the result of milder weather which reduced electricity demand.
Net income declined to $290 million or 99¢/share in the third quarter, down from net income of $389 million or $1.34/share in the comparable 2000 quarter. Analysts were projecting consensus earnings of $1.10/share, according to Thomson Financial/First Call.
The Houston company blamed lower earnings on summer conditions not being as hot as in 2000. The company’s wholesale energy segment produced third-quarter operating income of $266 million, compared to $314 million for the third quarter of 2000. Also contributing to the decline were increased plant operation and maintenance expenses from western operations, higher legal and regulatory expenses related to western markets, and higher administrative expenses, Reliant said.
“We’re very pleased with the solid performance of both our regulated and unregulated operations even when compared with the third quarter of last year when both businesses benefited from unusually favorable conditions,'” said Reliant Energy CEO Steve Letbetter.
The company’s natural gas distribution segment reported an operating loss of $25 million for the third quarter of 2001, compared to an operating loss of $42 million for the same period in 2000. Results for 2000 reflected expenses incurred in connection with exiting non-rate regulated natural gas business activities outside the company’s established market areas.
The company’s retail energy segment reported an operating loss of $7 million in the third quarter of 2001, compared to an operating loss of $19 million for the same period in 2000. Reliant attributed the reduction to increased sales of energy and energy services to commercial and industrial customers partially offset by increased staffing, advertising, and system costs in preparation for full retail competition in Texas beginning in 2002.
Reliant said it expected to complete the spin off of Reliant Resources by distributing shares to the market by the first quarter of 2002. It holds an 80% share of Reliant Resources, which had its initial public offering May 1.