GMP ANNOUNCES THIRD QUARTER EARNINGS
COLCHESTER,
VT…Green Mountain Power Corporation (NYSE: GMP) has announced
consolidated earnings of $0.48 per share of common stock, diluted, for the
third quarter of 2005 compared with consolidated earnings of $0.65 per share of
common stock, diluted, for the same period in 2004. Year to date earnings for
2005 are $1.50 per share, diluted, compared with earnings of $1.70 per share,
diluted for the first nine months of 2004.
Earnings declined in the
third quarter of 2005 primarily as a result of higher power supply, other
operating and transmission expenses partially offset by an increase in retail
revenues. "The earnings decline in 2005 was caused in large part by
significantly higher wholesale energy prices,” said Christopher L. Dutton,
President and Chief Executive Officer. “We expect earnings to
bounce back in the fourth quarter as the Company has more power supply than
anticipated demand, but not enough to counter the weakness we experienced
during the third quarter. As a result, we are revising our forecast of
2005 earnings to be within a range of $1.90 and $2.10 per share as compared
with previous guidance of $2.08 to $2.19 per share.”
The
Company has long-term, essentially fixed-price, power supply contracts that
cover over 90 percent of customer demand under normal weather conditions.
Nonetheless we were exposed to higher energy prices in the third quarter of
2005, including lost margins on incremental sales, increased costs of energy
lost over the transmission system (line losses) and higher allocated costs from
ISO New England for congestion and other ancillary energy services.
Hurricanes Katrina and Rita and a very hot summer sent New
England wholesale electricity prices sharply higher in the third
quarter.
“Cash
flow has been strong in 2005, and we expect to increase our annual dividend by
12 cents per share in the first quarter of 2006, consistent with our dividend
growth over the last few years, so long as financial and operating results
permit,” said Mr. Dutton. “Even after the anticipated 2006
dividend increase, the Company’s payout ratio will be below most other
comparable utilities, and we expect to continue our dividend growth policy
until we reach the middle of a payout range of between 50 and 70 percent of
earnings.”
The
Vermont Public Service Board issued an order in December 2003 allowing the
Company to carry unused deferred revenue totaling approximately $3.0 million to
2004 and to recognize this revenue to achieve its allowed rate of return during
2004. During the third quarter of 2004, the Company’s earnings
benefited by $0.05 per share as a result of recognizing deferred revenues,
compared with no recognition of deferred revenue during the same period of
2005. A rate increase of 1.9 percent effective in January 2005 resulted
in the replacement of deferred revenues with cash revenues and has contributed
to strong cash flows in 2005.
Retail operating revenues
for the third quarter of 2005 increased by $6.4 million compared with the same period
in 2004, reflecting the effects of warmer summer weather, increased sales of
utility services to other municipalities and utilities, the 1.9 percent rate
increase and an increase in the number of customers. Total retail
megawatt hour sales of electricity increased by 6.6 percent in the third
quarter of 2005, compared with the same period in 2004. Sales to
residential and small commercial and industrial customers increased by 13.4
percent and 8.2 percent, respectively, compared with the third quarter in
2004. By contrast, sales to large commercial and industrial customers
decreased by 0.2 percent in the third quarter of 2005 compared with the same
quarter last year. Increased revenues from the sale of utility services to
other utilities and large industrial customers in the third quarter of 2005
also contributed approximately $2.1 million to retail revenue growth, when
compared to the same period last year. Other operating expenses increased
by $1.9 million in the third quarter of 2005, reflecting an increase of $1.7
million in utility services expense. These sales of services are intended
to allow the Company to recover some of its administrative and general and
staffing costs from other parties and ultimately reduce costs to customers.
Wholesale revenues in the third quarter of 2005 also increased by $2.3 million
compared with the third quarter of 2004, reflecting higher energy prices.
Power supply expenses
increased $6.3 million in the third quarter of 2005 compared with the same
quarter of 2004 due to increased costs of market purchases to serve marginal
load, and increased costs of transmission line losses and congestion costs
allocated within the New England power pool by
ISO New England. Congestion charges represent the cost of delivering energy
to customers and reflect energy prices, customer demands, and the availability
of transmission and generation resources. The Company paid an average
market price of approximately $103 per megawatt hour for system purchases
during hours when customer demand exceeded supply during the third quarter of
2005, compared to $41 per megawatt hour in the same period last year, inclusive
of the effects of congestion and line losses.
Transmission expenses
increased by $600,000 in the third quarter of 2005 compared with the same
period last year, primarily as a result of increased energy purchases.
The Company’s future growth will benefit from expanded transmission
investment by VELCO, principally for the construction of high voltage
transmission lines in Vermont.
The Northwest Reliability Project is the most significant component of that
expanded investment. The Vermont Public Service Board has issued a
certificate of public good for the project and VELCO has begun construction of
this project.
In other developments,
Green Mountain Power will be recognized by the Edison Electric Institute next
week as the top-performing small-cap company in its Index of Shareholder-Owned
Electric Utilities for the past five years. The index values total return over
a five-year period.
There are statements in
this information release that contain projections or estimates and that are
considered to be "forward-looking" as defined by the Securities and
Exchange Commission (the "SEC"). In these statements, you may
find words such as believes, expects, plans, or similar words. These
statements are not guarantees of our future performance. There are risks,
uncertainties and other factors that could cause actual results to be different
from those projected.
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For further information, please contact Dorothy Schnure, Manager of Corporate
Communications, at 802-655-8418 or Robert Griffin, Vice President, Chief
Financial Officer and Treasurer, at 802-655-8452.