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November 3, 2005 |
Pepco Holdings Reports Third-Quarter 2005 Earnings; |
Pepco Holdings, Inc. (NYSE: POM) today reported third quarter 2005 consolidated earnings of $170.1 million, or 90 cents per share, compared to $111.0 million, or 64 cents per share, in the third quarter of 2004. Excluding special items (as described below), earnings for the third quarter of 2005 would have been $137.7 million, or 73 cents per share, compared to $118.7 million, or 68 cents per share, in the third quarter of 2004. The weighted average shares outstanding for the third quarter of 2005 were 189.2 million compared to 175.2 million for the third quarter of 2004, which resulted in 7 cents per share of dilution in earnings for the current period. |
The earnings increase, excluding special items, for the third quarter of 2005 as compared to the 2004 quarter was driven primarily by higher power delivery sales resulting from warmer weather, higher earnings at Conectiv Energy and Pepco Energy Services driven by higher generation output, and lower interest expense. Partially offsetting these increases were lower Standard Offer Service margins due to increased customer migration. |
"Our third quarter results reflect the benefit of warmer weather impacting both the utility and competitive energy businesses. Each of our utilities set a record for peak electric usage as a result of the warmer weather. Our transmission and distribution systems handled the increase in load well, demonstrating our focus on reliability and PHI's commitment to invest in our core business," said Dennis R. Wraase, Chairman, President and Chief Executive Officer. "We continue to make significant progress towards our debt reduction goal. So far this year we have paid down about $245 million of debt, which brings our net debt reduction since 2003 to approximately $975 million. We are very pleased with the progress we have made to strengthen the balance sheet." |
For the nine months ended Sept. 30, 2005, consolidated earnings were $289.6 million, or $1.53 per share, compared to $252.6 million, or $1.46 per share, for the same period in the prior year. Excluding special items, earnings for the nine months ended Sept. 30, 2005 would have been $252.1 million, or $1.33 per share, compared to $239.2 |
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million, or $1.38 per share, for the first nine months of 2004. The weighted average shares outstanding for the nine months ended Sept. 30, 2005 were 188.8 million compared to 173.1 million for the same period in the prior year, which resulted in 14 cents per share of dilution in earnings for the current period. |
The increase in earnings, excluding special items, for the nine months ended Sept. 30, 2005 compared to the same period in the prior year was driven primarily by higher power delivery sales resulting from warmer weather, higher earnings at Pepco Energy Services driven by higher retail sales and generation output, and lower interest expense. Partially offsetting these increases were changes in estimated unbilled revenue recorded by Delmarva Power and Atlantic City Electric in the second quarter of 2005, lower Standard Offer Service margins due to increased customer migration, and lower earnings at Conectiv Energy primarily due to lower Full Requirements Load Service earnings. |
Highlights |
Operations |
· | Power Delivery electric sales were 15,358 gigawatt hours (Gwhs) in the third quarter of 2005 compared to 14,028 Gwhs for the same period last year. Cooling degree days increased by 33.9% for the three months ended Sept. 30, 2005 as compared to the same period in 2004. |
· | Conectiv Energy's total generating output was 2,382 Gwhs in the third quarter of 2005 compared to 1,220 Gwhs in the third quarter of 2004. The increase resulted primarily from warmer weather and load growth. |
· | Conectiv Energy's gross margin (defined as revenue less cost of goods sold) on merchant generation was $100.0 million in the third quarter of 2005, compared to $64.2 million in the third quarter of 2004. The increase resulted primarily from increased generating output. |
· | Conectiv Energy's gross margin on Full Requirements Load Service was $(11.1) million in the third quarter of 2005, compared to $16.5 million in the third quarter of 2004. The decrease was driven by higher energy costs used to supply the load. |
· | Pepco Energy Services had retail electricity sales of 3,743 Gwh in the third quarter of 2005, up from retail sales of 2,562 Gwh in the third quarter of 2004. This increase primarily reflects the acquisition of additional commercial and industrial customer loads. |
Regulatory Matters |
· | On Sept. 1, 2005, Delmarva Power filed a base rate case in Delaware seeking approval of an annual rate increase of approximately $5.1 million ($1.6 million in distribution base rates and $3.5 million in supply rates). A decision is expected by May 1, 2006. |
· | On Sept. 20, 2005, the Delaware Public Service Commission approved the settlement reached in the Delaware Standard Offer Service (SOS) proceeding. The Delaware Public Service Commission |
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previously determined that SOS should be provided by Delmarva Power using a wholesale bidding approach. The settlement provides for the company to recover its costs associated with providing SOS and earn a margin. A key component of this margin is a fixed annual amount of $2.75 million. Customers will be served under the provisions of the approved settlement beginning May 1, 2006. |
Financing Activities |
· | On Sept. 15, 2005, Pepco redeemed prior to maturity $75 million of 7.375% first mortgage bonds due 2025. Proceeds from the June issuance of 5.40% senior secured notes were used to fund this redemption. |
· | On Oct. 27, 2005, DPL called 35,000 shares of its 6.75% Preferred Stock ($100 par value) for redemption on December 1, 2005 at par. |
Other |
· | On Aug. 25, 2005, Pepco closed on the sale of excess non-utility land located at Buzzard Point in the District of Columbia. The sale price of the land was $75 million. The transaction produced an after-tax gain of $40.7 million. |
Further details regarding changes in consolidated earnings between 2005 and 2004 can be found in the following schedules. Additional information regarding financial results and recent regulatory events can be found in the Pepco Holdings, Inc. Form 10-Q for the quarter ended Sept. 30, 2005 as filed with the Securities and Exchange Commission, which is available atwww.pepcoholdings.com/investors. |
Special Items |
PHI's earnings for the third quarter of 2005 determined in accordance with Generally Accepted Accounting Principles (GAAP) include the following special items which management believes are not representative of the company's core business operations: |
· | After-tax earnings of $40.7 million, or 22 cents per share, related to the gain associated with the sale of the Buzzard Point non-utility land and |
· | After-tax charges of $8.3 million, or 5 cents per share, related to the increase in income tax expense for the interest accrued on the potential impact of the IRS Revenue Ruling on mixed service costs (IRS Revenue Ruling 2005-53). |
GAAP earnings for the third quarter of 2004 included the following special item: |
· | After-tax charges of $7.7 million, or 4 cents per share, related to the early payment of Conectiv Energy's Bethlehem debt. |
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In addition to the items listed above for the third quarter of 2005, PHI's GAAP earnings for the nine months ended Sept. 30, 2005 include the following special item: |
· | After-tax earnings of $5.1 million, or 3 cents per share, related to the Atlantic City Electric base rate case proceedings settlement. |
In addition to the items listed above for the third quarter of 2004, GAAP earnings for the nine months ended Sept. 30, 2004 included the following special items: |
· | After-tax earnings of $13.2 million, or 7 cents per share, related to the impact of changes in local tax regulations that were retroactive to 2001; |
· | After-tax earnings of $8.6 million, or 5 cents per share, related to a gain on the condemnation settlement associated with the transfer of Vineland distribution assets; |
· | After-tax earnings of $6.6 million, or 4 cents per share, related to the disposition of a joint venture associated with the Vineland co-generation facility; and |
· | After-tax charges of $7.3 million, or 4 cents per share, related to the impairment of the Starpower investment. |
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Reconciliation of GAAP Earnings to Earnings Excluding Special Items | |||||
Net Earnings - Dollars in Millions | Three Months Ended | Nine Months Ended | |||
2005 | 2004 | 2005 | 2004 | ||
Reported (GAAP) Net Earnings | $170.1 | $ 111.0 | $ 289.6 | $ 252.6 | |
Special Items: | |||||
Accrual related to potential impact of | 8.3 | - | 8.3 | - | |
Conectiv Bethlehem term loan buy down | - | 7.7 | - | 7.7 | |
Starpower investment impairment | - | - | - | 7.3 | |
Gain on sale of Vineland co-generation facility | - | - | - | (6.6) | |
Gain on sale of Vineland distribution assets | - | - | - | (8.6) | |
Local tax benefit - retroactive change in regulations | - | - | - | (13.2) | |
New Jersey base rate case settlement | - | - | (5.1) | - | |
Gain on sale of Buzzard Point non-utility land | (40.7) | - | (40.7) | - | |
Net Earnings, Excluding Special Items | $137.7 | $ 118.7 | $ 252.1 | $ 239.2 |
Earnings per Share | Three Months Ended | Nine Months Ended | |||
2005 | 2004 | 2005 | 2004 | ||
Reported (GAAP) Earnings per Share | $ 0.90 | $ 0.64 | $ 1.53 | $ 1.46 | |
Special Items: | |||||
Accrual related to potential impact of | 0.05 | - | 0.05 | - | |
Conectiv Bethlehem term loan buy down | - | 0.04 | - | 0.04 | |
Starpower investment impairment | - | - | - | 0.04 | |
Gain on sale of Vineland co-generation facility | - | - | - | (0.04) | |
Gain on sale of Vineland distribution assets | - | - | - | (0.05) | |
Local tax benefit - retroactive change in regulations | - | - | - | (0.07) | |
New Jersey base rate case settlement | - | - | (0.03) | - | |
Gain on sale of Buzzard Point non-utility land | (0.22) | - | (0.22) | - | |
Earnings per Share, Excluding Special Items | $ 0.73 | $ 0.68 | $ 1.33 | $ 1.38 |
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CONFERENCE CALL FOR INVESTORS |
Note: If any non-GAAP financial information (as defined by the Securities and Exchange Commission in Regulation G) is used during the quarterly earnings conference call, a presentation of the most directly comparable GAAP measure and a reconciliation of the differences will be available athttp://www.pepcoholdings.com/investors/index_financialrelease.html. |
About PHI: Pepco Holdings, Inc., headquartered in Washington, D.C., delivers electricity and natural gas to about 1.8 million customers in Delaware, the District of Columbia, Maryland, New Jersey and Virginia, through its subsidiaries Pepco, Delmarva Power and Atlantic City Electric. PHI also provides competitive wholesale generation services through Conectiv Energy and retail energy products and services through Pepco Energy Services. |
Forward-Looking Statements:Except for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaning of federal securities law. These statements contain management's beliefs based on information currently available to management and on various assumptions concerning future events. Forward-looking statements are not a guarantee of future performance or events. They are subject to a number of uncertainties and other factors, many of which are outside the company's control. Factors that could cause actual results to differ materially from those in the forward-looking statements herein include general economic, business and financing conditions; availability and cost of capital; changes in laws, regulations or regulatory policies; weather conditions; competition; governmental actions; and other presently unknown or unforeseen factors. These uncertainties and factors could cause actual results to differ materially from such statements. PHI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results and prospects of PHI. |
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SELECTED FINANCIAL INFORMATION | |||||||
Pepco Holdings, Inc. | |||||||
3rd Quarter | |||||||
Competitive Energy | |||||||
Power | Conectiv | Pepco | Other | Corporate | Total | ||
2004 Net Income/(Loss) (GAAP) 1/ | $ 0.55 | $ 0.11 | $ 0.01 | $ 0.05 | $ (0.08) | $ 0.64 | |
2004 Special Items 2/ | |||||||
· CBI Term Loan Buydown | - | 0.04 | - | - | - | 0.04 | |
2004 Net Income/(Loss), excluding Special Items | 0.55 | 0.15 | 0.01 | 0.05 | (0.08) | 0.68 | |
Change from 2004 Net Income/(Loss), excluding Special Items | |||||||
Regulated Operations | |||||||
· Revenue | - Customer Mix, net | 0.02 | - | - | - | - | 0.02 |
- Weather (estimate) 3/ | 0.10 | - | - | - | - | 0.10 | |
- Standard Offer Service Margin | (0.04) | - | - | - | - | (0.04) | |
· Operation & Maintenance | (0.02) | - | - | - | - | (0.02) | |
· Gain on sale of property in 2005 | 0.01 | - | - | - | - | 0.01 | |
· Other, net | 0.01 | - | - | - | - | 0.01 | |
Conectiv Energy | |||||||
· Margins (operating revenue less cost of goods sold) | |||||||
- Merchant Generation | - | 0.12 | - | - | - | 0.12 | |
- Full Requirements Load Service | - | (0.09) | - | - | - | (0.09) | |
· Operating costs, net | - | (0.02) | - | - | - | (0.02) | |
Pepco Energy Services | |||||||
· Margins - primarily higher power plant output | - | - | 0.03 | - | - | 0.03 | |
Other Non-Regulated | |||||||
· 2004 gain on sale of aircraft leases | - | - | - | (0.01) | - | (0.01) | |
· Other, net - primarily 2004 financial investing activities | - | - | - | (0.01) | - | (0.01) | |
Corporate & Other | - | - | - | - | (0.02) | (0.02) | |
Capital Costs | - | - | - | 0.01 | 0.03 | 0.04 | |
Dilution | (0.06) | (0.01) | - | - | - | (0.07) | |
2005 Net Income/(Loss), excluding Special Items | 0.57 | 0.15 | 0.04 | 0.04 | (0.07) | 0.73 | |
2005 Special Items 2/ | |||||||
· Gain on sale of Buzzard Point land | 0.22 | - | - | - | - | 0.22 | |
· IRS Revenue Ruling 2005-53 (Mixed Service Costs) | (0.05) | - | - | - | - | (0.05) | |
2005 Net Income/(Loss) (GAAP) 4/ | $ 0.74 | $ 0.15 | $ 0.04 | $ 0.04 | $ (0.07) | $ 0.90 |
Notes: | |
1/ | 2004 average shares outstanding for the 3rd quarter were 175,226,990. |
2/ | Management believes the special items are not representative of the company's core business operations. |
3/ | The effect of weather in 2005 compared with the 20 year average weather is estimated to have increased earnings by $.09 per share. |
4/ | 2005 average shares outstanding for the 3rd quarter were 189,216,577. |
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SELECTED FINANCIAL INFORMATION | |||||||
Pepco Holdings, Inc. | |||||||
Year-to-Date September | |||||||
Competitive Energy | |||||||
Power | Conectiv | Pepco | Other | Corporate | Total | ||
2004 Net Income/(Loss) (GAAP) 1/ | $ 1.21 | $ 0.28 | $ 0.04 | $ 0.21 | $ (0.28) | $ 1.46 | |
2004 Special Items 2/ | |||||||
· Local Tax Benefit | - | - | (0.01) | (0.05) | (0.01) | (0.07) | |
· Gain on Vineland distribution assets | (0.05) | - | - | - | - | (0.05) | |
· Gain on disposition associated with Vineland co-generation facility | - | (0.04) | - | - | - | (0.04) | |
· Starpower Impairment | - | - | - | 0.04 | - | 0.04 | |
· CBI Term Loan Buydown | - | 0.04 | - | - | - | 0.04 | |
2004 Net Income/(Loss), excluding Special Items | 1.16 | 0.28 | 0.03 | 0.20 | (0.29) | 1.38 | |
Change from 2004 Net Income/(Loss), excluding Special Items | |||||||
Regulated Operations | |||||||
· Revenue - | - Delmarva Power/Atlantic City Electric | (0.04) | - | - | - | - | (0.04) |
- Customer Mix, Transmission, net | 0.05 | - | - | - | - | 0.05 | |
- Weather (estimate) 3/ | 0.06 | - | - | - | - | 0.06 | |
- Standard Offer Service Margin | (0.04) | - | - | - | - | (0.04) | |
· Gain on sale of property in 2005 | 0.02 | - | - | - | - | 0.02 | |
· Gain on sale of property in 2004 | (0.02) | - | - | - | - | (0.02) | |
· Operation & Maintenance | (0.02) | - | - | - | - | (0.02) | |
· Other, net | (0.01) | - | - | - | - | (0.01) | |
Conectiv Energy | |||||||
· Margins (operating revenue less cost of goods sold) | |||||||
- Merchant Generation | - | 0.12 | - | - | - | 0.12 | |
- Full Requirements Load Service | - | (0.11) | - | - | - | (0.11) | |
- Other Power, Oil & Gas Marketing (including | - | (0.03) | - | - | - | (0.03) | |
Pepco Energy Services | |||||||
· Margins | - Primarily retail electric commodity business | - | - | 0.05 | - | - | 0.05 |
- Primarily higher power plant margins | - | - | 0.02 | - | - | 0.02 | |
· Other, net | - | - | 0.01 | - | - | 0.01 | |
Other Non-Regulated | |||||||
· Gain on sale of 2004 aircraft leases | - | - | - | (0.03) | - | (0.03) | |
· Financing and investing, primarily related to 2004 activity | - | - | - | (0.03) | - | (0.03) | |
· Primarily sale of energy investment | - | - | - | 0.03 | - | 0.03 | |
Corporate & Other | - | - | - | - | (0.03) | (0.03) | |
Capital Costs | 0.02 | - | - | - | 0.07 | 0.09 | |
Dilution | (0.11) | (0.02) | (0.01) | (0.01) | 0.01 | (0.14) | |
2005 Net Income/(Loss), excluding Special Items | 1.07 | 0.24 | 0.10 | 0.16 | (0.24) | 1.33 | |
2005 Special Items 2/ | |||||||
· ACE - New Jersey Base Rate Case Settlement | 0.03 | - | - | - | - | 0.03 | |
· Gain on sale of Buzzard Point land | 0.22 | - | - | - | - | 0.22 | |
· IRS Revenue Ruling 2005-53 (Mixed Service Costs) | (0.05) | - | - | - | - | (0.05) | |
2005 Net Income/(Loss) (GAAP) 4/ | $ 1.27 | $ 0.24 | $ 0.10 | $ 0.16 | $ (0.24) | $ 1.53 |
Notes: | ||
1/ | 2004 average shares outstanding for year-to-date September were 173,085,156. | |
2/ | Management believes the special items are not representative of the company's core business operations. | |
3/ | The effect of weather in 2005 compared with the 20 year average weather is estimated to have increased earnings by $.10 per share. | |
4/ | 2005 average shares outstanding for year-to-date September were 188,803,771. | |
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SEGMENT INFORMATION (Millions of Dollars) | |||||||||||||||||||
For the Three Months Ended September 30, 2005 | |||||||||||||||||||
Competitive Energy Segments | |||||||||||||||||||
Power | Conectiv | Pepco | Other | (a) | PHI Cons | ||||||||||||||
Operating Revenue | $ | 1,503.4 | $ | 820.0 | (b) | $ | 429.1 | $ | 20.8 | $ | (284.6) | $ | 2,488.7 | ||||||
Operating Expense | 1,214.7 | (b) | 770.0 | 414.7 | 1.4 | (282.6) | 2,118.2 | ||||||||||||
Operating Income (Loss) | 288.7 | 50.0 | 14.4 | 19.4 | (2.0) | 370.5 | |||||||||||||
Interest and Dividend Income | 3.4 | 8.4 | .8 | 29.3 | (37.7) | 4.2 | |||||||||||||
Interest Expense | 44.3 | 15.2 | 2.7 | 38.9 | (15.9) | 85.2 | |||||||||||||
Income Tax Expense (Benefit) | 111.6 | (c) | 19.4 | 4.6 | 1.6 | (9.0) | 128.2 | ||||||||||||
Net Income (Loss) | $ | 139.8 | (d) | $ | 28.7 | $ | 8.3 | $ | 8.1 | $ | (14.8) | $ | 170.1 | ||||||
Total Assets | $ | 8,830.6 | $ | 2,224.9 | $ | 643.3 | $ | 1,390.4 | $ | 1,134.0 | $ | 14,223.2 | |||||||
Construction Expenditures | $ | 115.5 | $ | 2.7 | $ | 3.1 | $ | - | $ | 1.9 | $ | 123.2 |
(a) | Includes inter-segment eliminations and unallocated Pepco Holdings' (parent company) capital costs, such as acquisition financing costs, and the depreciation and amortization related to purchase accounting adjustments for the fair value of non-regulated Conectiv assets and liabilities as of August 1, 2002. The "total assets" line of this column includes Pepco Holdings' goodwill balance. |
(b) | Power Delivery purchased electric energy, electric capacity and natural gas from Conectiv Energy in the amount of $192.7 million for the three months ended September 30, 2005. |
(c) | Includes $8.3 million in income tax expense related to IRS Revenue Ruling 2005-53. |
(d) | Includes after-tax gain of $40.7 million from sale of non-utility land owned by Pepco at Buzzard Point. |
For the Three Months Ended September 30, 2004 | ||||||||||||||||||||||||
Competitive Energy Segments | ||||||||||||||||||||||||
Power | Conectiv | Pepco | Other | (a) | PHI Cons | |||||||||||||||||||
Operating Revenue | $ | 1,314.0 | $ | 648.9 | (b) | $ | 301.4 | $ | 21.6 | $ | (239.4) | $ | 2,046.5 | |||||||||||
Operating Expense | 1,118.0 | (b) | 596.8 | 297.2 | .1 | (245.1) | 1,767.0 | |||||||||||||||||
Operating Income | 196.0 | 52.1 | 4.2 | 21.5 | 5.7 | 279.5 | ||||||||||||||||||
Interest and Dividend Income | .5 | 1.8 | .2 | 14.0 | (15.3) | 1.2 | ||||||||||||||||||
Interest Expense | 41.9 | 21.3 | 2.9 | 24.8 | 13.6 | 104.5 | ||||||||||||||||||
Income Tax Expense (Benefit) | 63.0 | 13.1 | 1.0 | 1.3 | (6.9) | 71.5 | ||||||||||||||||||
Net Income (Loss) | $ | 95.4 | $ | 19.8 | $ | 1.4 | $ | 9.5 | $ | (15.1) | $ | 111.0 | ||||||||||||
Total Assets | $ | 8,548.3 | $ | 1,956.4 | $ | 558.3 | $ | 1,379.9 | $ | 1,085.8 | $ | 13,528.7 | ||||||||||||
Construction Expenditures | $ | 118.2 | $ | 2.3 | $ | 2.5 | $ | - | $ | .8 | $ | 123.8 |
(a) | Includes inter-segment eliminations and unallocated Pepco Holdings' (parent company) capital costs, such as acquisition financing costs, and the depreciation and amortization related to purchase accounting adjustments for the fair value of non-regulated Conectiv assets and liabilities as of August 1, 2002. The "total assets" line of this column includes Pepco Holdings' goodwill balance. |
(b) | Power Delivery purchased electric energy, electric capacity and natural gas from Conectiv Energy in the amount of $158.7 million for the three months ended September 30, 2004. |
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SEGMENT INFORMATION (Continued) (Millions of Dollars) | |||||||||||||||||||
For the Nine Months Ended September 30, 2005 | |||||||||||||||||||
Competitive Energy Segments | |||||||||||||||||||
Power | Conectiv | Pepco | Other | (a) | PHI Cons | ||||||||||||||
Operating Revenue | $ | 3,582.3 | $ | 1,913.6 | (b) | $ | 1,101.9 | $ | 61.8 | $ | (654.0) | $ | 6,005.6 | ||||||
Operating Expense | 3,061.0 | (b) | 1,821.4 | 1,069.7 | 3.6 | (647.5) | 5,308.2 | ||||||||||||
Operating Income (Loss) | 521.3 | 92.2 | 32.2 | 58.2 | (6.5) | 697.4 | |||||||||||||
Interest and Dividend Income | 5.9 | 23.1 | 1.5 | 75.2 | (97.8) | 7.9 | |||||||||||||
Interest Expense | 129.6 | 43.5 | 4.4 | 103.3 | (28.1) | 252.7 | |||||||||||||
Income Tax Expense (Benefit) | 180.2 | (c) | 32.2 | 11.3 | 7.4 | (28.6) | 202.5 | ||||||||||||
Extraordinary Item (net | 9.0 | (d) | - | - | - | - | 9.0 | ||||||||||||
Net Income (Loss) | $ | 240.2 | (e) | $ | 44.7 | $ | 19.4 | $ | 30.6 | $ | (45.3) | $ | 289.6 | ||||||
Total Assets | $ | 8,830.6 | $ | 2,224.9 | $ | 643.3 | $ | 1,390.4 | $ | 1,134.0 | $ | 14,223.2 | |||||||
Construction Expenditures | $ | 322.6 | $ | 7.1 | $ | 7.3 | $ | - | $ | 4.4 | $ | 341.4 |
(a) | Includes inter-segment eliminations and unallocated Pepco Holdings' (parent company) capital costs, such as acquisition financing costs, and the depreciation and amortization related to purchase accounting adjustments for the fair value of non-regulated Conectiv assets and liabilities as of August 1, 2002. The "total assets" line of this column includes Pepco Holdings' goodwill balance. |
(b) | Power Delivery purchased electric energy, electric capacity and natural gas from Conectiv Energy in the amount of $440.9 million for the nine months ended September 30, 2005. |
(c) | Includes $8.3 million in income tax expense related to IRS Revenue Ruling 2005-53. |
(d) | Relates to ACE's electric distribution rate case settlement that was accounted for in the first quarter of 2005. This resulted in ACE's reversal of $9.0 million in after-tax accruals related to certain deferred costs that are now deemed recoverable. This amount is classified as extraordinary since the original accrual was part of an extraordinary charge in conjunction with the accounting for competitive restructuring in 1999. |
(e) | Includes after-tax gain of $40.7 million from sale of non-utility land owned by Pepco at Buzzard Point. |
For the Nine Months Ended September 30, 2004 | |||||||||||||||||||||||||
Competitive Energy Segments | |||||||||||||||||||||||||
Power | Conectiv | Pepco | Other | (a) | PHI Cons | ||||||||||||||||||||
Operating Revenue | $ | 3,426.7 | $ | 1,802.1 | (b) | $ | 855.6 | $ | 66.9 | $ | (649.2) | $ | 5,502.1 | ||||||||||||
Operating Expense | 2,957.1 | (b) | 1,700.2 | 843.0 | (1.6) | (657.1) | 4,841.6 | ||||||||||||||||||
Operating Income | 469.6 | 101.9 | 12.6 | 68.5 | 7.9 | 660.5 | |||||||||||||||||||
Interest and Dividend Income | 4.6 | 4.0 | .4 | 41.3 | (42.3) | 8.0 | |||||||||||||||||||
Interest Expense | 133.5 | 36.2 | 4.1 | 68.0 | 47.4 | 289.2 | |||||||||||||||||||
Income Tax Expense (Benefit) (c) | 142.1 | 32.6 | 2.5 | (5.8) | (29.8) | 141.6 | |||||||||||||||||||
Net Income (Loss) | $ | 208.7 | $ | 49.4 | $ | 8.2 | $ | 36.5 | $ | (50.2) | $ | 252.6 | |||||||||||||
Total Assets | $ | 8,548.3 | $ | 1,956.4 | $ | 558.3 | $ | 1,379.9 | $ | 1,085.8 | $ | 13,528.7 | |||||||||||||
Construction Expenditures | $ | 340.6 | $ | 7.0 | $ | 7.5 | $ | - | $ | 1.9 | $ | 357.0 |
(a) | Includes inter-segment eliminations and unallocated Pepco Holdings' (parent company) capital costs, such as acquisition financing costs, and the depreciation and amortization related to purchase accounting adjustments for the fair value of non-regulated Conectiv assets and liabilities as of August 1, 2002. The "total assets" line of this column includes Pepco Holdings' goodwill balance. |
(b) | Power Delivery purchased electric energy, electric capacity and natural gas from Conectiv Energy in the amount of $456.0 million for the nine months ended September 30, 2004. |
(c) | In February 2004, a local jurisdiction issued final consolidated tax return regulations, which were retroactive to 2001. Under these regulations, Pepco Holdings (parent company) and other affiliated companies doing business in this location now have the necessary guidance to file a consolidated income tax return. This allows Pepco Holdings' subsidiaries with taxable losses to utilize those losses against tax liabilities of Pepco Holdings' companies with taxable income. During the first quarter of 2004, Pepco Holdings and its subsidiaries recorded the impact of the new regulations of $13.2 million for 2001 through 2003. |
|
PEPCO HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||
(Millions, except earnings per share) | ||||||||||||||
Operating Revenues | ||||||||||||||
Power Delivery | $ | 1,503.4 | $ | 1,314.0 | $ | 3,582.3 | $ | 3,426.7 | ||||||
Competitive Energy | 967.9 | 710.9 | 2,364.7 | 2,007.3 | ||||||||||
Other | 17.4 | 21.6 | 58.6 | 68.1 | ||||||||||
Total Operating Revenues | 2,488.7 | 2,046.5 | 6,005.6 | 5,502.1 | ||||||||||
Operating Expenses | ||||||||||||||
Fuel and purchased energy | 1,539.7 | 1,197.3 | 3,635.2 | 3,220.4 | ||||||||||
Other services cost of sales | 169.7 | 155.6 | 522.8 | 483.8 | ||||||||||
Other operation and maintenance | 207.4 | 192.5 | 586.7 | 575.2 | ||||||||||
Depreciation and amortization | 109.1 | 113.7 | 316.6 | 335.9 | ||||||||||
Other taxes | 98.2 | 91.3 | 256.3 | 227.5 | ||||||||||
Deferred electric service costs | 63.1 | 18.7 | 63.9 | 27.7 | ||||||||||
Impairment loss | 3.3 | - | 3.3 | - | ||||||||||
Gain on sale of assets | (72.3) | (2.1) | (76.6) | (28.9) | ||||||||||
Total Operating Expenses | 2,118.2 | 1,767.0 | 5,308.2 | 4,841.6 | ||||||||||
Operating Income | 370.5 | 279.5 | 697.4 | 660.5 | ||||||||||
Other Income (Expenses) | ||||||||||||||
Interest and dividend income | 4.2 | 1.2 | 7.9 | 8.0 | ||||||||||
Interest expense | (85.2) | (104.5) | (252.7) | (289.2) | ||||||||||
(Loss) income from equity investments | (.2) | 1.6 | (3.2) | 14.4 | ||||||||||
Impairment loss on equity investments | - | - | - | (11.2) | ||||||||||
Other income | 11.5 | 6.8 | 40.9 | 17.2 | ||||||||||
Other expenses | (1.9) | (1.4) | (5.3) | (3.3) | ||||||||||
Total Other Expenses, Net | (71.6) | (96.3) | (212.4) | (264.1) | ||||||||||
Preferred Stock Dividend Requirements of Subsidiaries | .6 | .7 | 1.9 | 2.2 | ||||||||||
Income Before Income Tax Expense | 298.3 | 182.5 | 483.1 | 394.2 | ||||||||||
Income Tax Expense | 128.2 | 71.5 | 202.5 | 141.6 | ||||||||||
Income Before Extraordinary Item | 170.1 | 111.0 | 280.6 | 252.6 | ||||||||||
Extraordinary Item (net of tax of $6.2 million) | - | - | 9.0 | - | ||||||||||
Net Income | 170.1 | 111.0 | 289.6 | 252.6 | ||||||||||
Retained Earnings at Beginning of Period | 888.9 | 836.7 | 863.7 | 781.0 | ||||||||||
Dividends on Common Stock | (47.2) | (43.1) | (141.5) | (129.0) | ||||||||||
Retained Earnings at End of Period | $ | 1,011.8 | $ | 904.6 | $ | 1,011.8 | $ | 904.6 | ||||||
Share Information | ||||||||||||||
Basic weighted average shares outstanding | 189.2 | 175.2 | 188.8 | 173.1 | ||||||||||
Diluted weighted average shares outstanding | 189.3 | 175.2 | 188.9 | 173.1 | ||||||||||
Basic and Diluted earnings per share of common stock: | ||||||||||||||
Before extraordinary item | $ | .90 | $ | .64 | $ | 1.48 | $ | 1.46 | ||||||
Extraordinary item | - | - | .05 | - | ||||||||||
Total | $ | .90 | $ | .64 | $ | 1.53 | $ | 1.46 |
11 |
PEPCO HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||
September 30, | December 31, | |||||||||
ASSETS | 2005 | 2004 | ||||||||
(Millions of Dollars) | ||||||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | $ | 249.7 | $ | 29.6 | ||||||
Restricted cash | 30.6 | 42.0 | ||||||||
Accounts receivable, less allowance for | 1,389.0 | 1,126.9 | ||||||||
Fuel, materials and supplies - at average cost | 291.5 | 268.4 | ||||||||
Unrealized gains - derivative contracts | 200.0 | 90.3 | ||||||||
Prepaid expenses and other | 135.1 | 119.6 | ||||||||
Total Current Assets | 2,295.9 | 1,676.8 | ||||||||
INVESTMENTS AND OTHER ASSETS | ||||||||||
Goodwill | 1,428.0 | 1,430.5 | ||||||||
Regulatory assets | 1,205.9 | 1,335.4 | ||||||||
Investment in finance leases held in trust | 1,277.9 | 1,218.7 | ||||||||
Prepaid pension expense | 153.1 | 165.7 | ||||||||
Other | 579.9 | 466.1 | ||||||||
Total Investments and Other Assets | 4,644.8 | 4,616.4 | ||||||||
PROPERTY, PLANT AND EQUIPMENT | ||||||||||
Property, plant and equipment | 11,292.3 | 11,045.2 | ||||||||
Accumulated depreciation | (4,009.8) | (3,957.2) | ||||||||
Net Property, Plant and Equipment | 7,282.5 | 7,088.0 | ||||||||
TOTAL ASSETS | $ | 14,223.2 | $ | 13,381.2 |
|
PEPCO HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||
September 30, | December 31, | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | 2005 | 2004 | ||||||||
(Millions of dollars, except shares) | ||||||||||
CURRENT LIABILITIES | ||||||||||
Short-term debt | $ | 652.8 | $ | 836.0 | ||||||
Accounts payable and accrued liabilities | 950.6 | 663.5 | ||||||||
Capital lease obligations due within one year | 5.1 | 4.9 | ||||||||
Taxes accrued | 230.3 | 59.8 | ||||||||
Interest accrued | 66.1 | 90.1 | ||||||||
Other | 398.9 | 320.3 | ||||||||
Total Current Liabilities | 2,303.8 | 1,974.6 | ||||||||
DEFERRED CREDITS | ||||||||||
Regulatory liabilities | 533.1 | 391.9 | ||||||||
Income taxes | 2,053.0 | 1,981.8 | ||||||||
Investment tax credits | 52.2 | 55.7 | ||||||||
Other post-retirement benefit obligation | 287.6 | 279.5 | ||||||||
Other | 304.3 | 203.7 | ||||||||
Total Deferred Credits | 3,230.2 | 2,912.6 | ||||||||
LONG-TERM LIABILITIES | ||||||||||
Long-term debt | 4,322.9 | 4,362.1 | ||||||||
Transition Bonds issued by ACE Funding | 503.2 | 523.3 | ||||||||
Long-term project funding | 72.4 | 65.3 | ||||||||
Capital lease obligations | 119.2 | 122.1 | ||||||||
Total Long-Term Liabilities | 5,017.7 | 5,072.8 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
PREFERRED STOCK OF SUBSIDIARIES | ||||||||||
Serial preferred stock | 27.0 | 27.0 | ||||||||
Redeemable serial preferred stock | 27.9 | 27.9 | ||||||||
Total Preferred Stock of Subsidiaries | 54.9 | 54.9 | ||||||||
SHAREHOLDERS' EQUITY | ||||||||||
Common stock, $.01 par value, authorized | 1.9 | 1.9 | ||||||||
Premium on stock and other capital contributions | 2,593.0 | 2,566.2 | ||||||||
Capital stock expense | (13.5) | (13.5) | ||||||||
Accumulated other comprehensive income (loss) | 23.4 | (52.0) | ||||||||
Retained earnings | 1,011.8 | 863.7 | ||||||||
Total Shareholders' Equity | 3,616.6 | 3,366.3 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 14,223.2 | $ | 13,381.2 |
|
PEPCO HOLDINGS, INC. AND SUBSIDIARIES - CAPITAL STRUCTURE |
The components of Pepco Holdings' capital structure, expressed as a percentage of total capitalization (including short-term debt and current maturities of long-term debt but excluding (i) transition bonds issued by Atlantic City Electric Transition Funding LLC (ACE Funding) in the principal amount of $531.7 million and $551.3 million at September 30, 2005 and December 31, 2004, respectively, and (ii) Pepco Energy Services' project funding secured by customer accounts receivable of $79.1 million and $70.7 million at September 30, 2005 and December 31, 2004, respectively) are shown below. The transition bonds issued by ACE Funding and the project funding of Pepco Energy Services, which are both effectively securitized, are excluded because the major credit rating agencies treat effectively securitized debt separately and not as general obligations of PHI, when computing credit quality measures. (Dollar amounts in the table are in millions.) |
September 30, 2005 | December 31, 2004 | |||||||||
Common Shareholders' Equity | $ | 3,616.6 | 42.0 | % | $ | 3,366.3 | 39.2 | % | ||
Preferred Stock of subsidiaries (a) | 54.9 | .6 | 54.9 | .6 | ||||||
Long-Term Debt (b) | 4,890.4 | 56.8 | 5,003.3 | 58.3 | ||||||
Short-Term Debt (c) | 50.0 | .6 | 161.3 | 1.9 | ||||||
Total | $ | 8,611.9 | 100.0 | % | $ | 8,585.8 | 100.0 | % | ||
(a) | Consists of Serial Preferred Stock and Redeemable Serial Preferred Stock issued by subsidiaries of PHI. |
(b) | Consists of first mortgage bonds, medium term notes, other long-term debt, current maturities of long-term debt, and Variable Rate Demand Bonds. Excludes capital lease obligations, transition bonds issued by ACE Funding, and project funding of Pepco Energy Services secured by customer accounts receivable and the current portions of these obligations. |
(c) | Excludes current maturities of long-term debt, capital lease obligations due within one year, and Variable Rate Demand Bonds (VRDB). In accordance with GAAP, the VRDB are included in short-term debt on the Balance Sheet of PHI because they are due on demand by the bondholder. Bonds submitted for purchase are remarketed by a remarketing agent on a best efforts basis and the remarketing resets the interest rate at market rates. However, PHI views the VRDBs as long-term financing in effect because the maturity dates range from 2009 to 2031, and PHI expects the remarketing to be successful due to the creditworthiness of the issuers. |
|
PEPCO HOLDINGS, INC. AND SUBSIDIARIES - CAPITAL STRUCTURE (continued) | |
A detail of Pepco Holdings' short-term debt at September 30, 2005, in millions, is as follows: |
As of September 30, 2005 | ||||||||||||||||||
Type | PHI | Pepco | DPL | ACE | ACE | PES | PCI | PHI | ||||||||||
Variable Rate | $ | - | $ | - | $ | 104.8 | $ | 22.6 | $ | - | $ | 31.0 | $ | - | $ | 158.4 | ||
Current Portion | 300.0 | - | 3.0 | 65.0 | 28.6 | .1 | 41.0 | 437.7 | ||||||||||
Current Portion of | - | - | - | - | - | 6.7 | - | 6.7 | ||||||||||
Floating Rate Note | 50.0 | - | - | - | - | - | - | 50.0 | ||||||||||
Total | $ | 350.0 | $ | - | $ | 107.8 | $ | 87.6 | $ | 28.6 | $ | 37.8 | $ | 41.0 | $ | 652.8 | ||
A detail of Pepco Holdings' short-term debt at December 31, 2004, in millions, is as follows: |
As of December 31, 2004 | ||||||||||
Type | PHI | Pepco | DPL | ACE | ACE | PES | PCI | Conectiv | PHI | |
Variable Rate | $ - | $ - | $104.8 | $22.6 | $ - | $31.0 | $ - | $ - | $158.4 | |
Current Portion | - | 100.0 | 2.7 | 40.0 | 28.1 | .1 | 60.0 | 280.0 | 510.9 | |
Current Portion of | - | - | - | - | - | 5.4 | - | - | 5.4 | |
Floating Rate | 50.0 | - | - | - | - | - | - | - | 50.0 | |
Commercial Paper | 78.6 | - | - | 32.7 | - | - | - | - | 111.3 | |
Total | $128.6 | $100.0 | $107.5 | $95.3 | $28.1 | $36.5 | $60.0 | $280.0 | $836.0 | |
|
POWER DELIVERY SALES AND REVENUES | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
Power Delivery Sales (Gigawatt Hours) | 2005 | 2004 | 2005 | 2004 | ||||||||||
Regulated T&D Electric Sales | ||||||||||||||
Residential | 5,746 | 5,036 | 14,146 | 13,945 | ||||||||||
Commercial | 8,401 | 7,795 | 21,877 | 21,595 | ||||||||||
Industrial | 1,152 | 1,137 | 3,273 | 3,359 | ||||||||||
Other | 59 | 60 | 186 | 190 | ||||||||||
Total Regulated T&D Electric Sales | 15,358 | 14,028 | 39,482 | 39,089 | ||||||||||
Default Electricity Supply Sales | ||||||||||||||
Residential | 5,602 | 4,776 | 13,699 | 13,152 | ||||||||||
Commercial | 4,223 | 5,059 | 11,300 | 14,681 | ||||||||||
Industrial | 556 | 558 | 1,536 | 1,761 | ||||||||||
Other | 32 | 58 | 128 | 171 | ||||||||||
Total Default Electricity Supply Sales | 10,413 | 10,451 | 26,663 | 29,765 | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
Power Delivery Electric Revenue ($ in Millions) | 2005 | 2004 | 2005 | 2004 | ||||||||||
Regulated T&D Electric Revenue | ||||||||||||||
Residential | $ | 207.2 | 186.3 | 486.9 | 477.9 | |||||||||
Commercial | 223.0 | 203.8 | 552.3 | 533.9 | ||||||||||
Industrial | 9.8 | 9.7 | 28.1 | 28.0 | ||||||||||
Other (Includes PJM) | 63.6 | 58.3 | 181.9 | 179.3 | ||||||||||
Total Regulated T&D Electric Revenue | $ | 503.6 | 458.1 | 1,249.2 | 1,219.1 | |||||||||
Default Supply Revenue | ||||||||||||||
Residential | $ | 425.7 | 346.8 | 920.6 | 790.6 | |||||||||
Commercial | 317.1 | 348.7 | 738.9 | 834.1 | ||||||||||
Industrial | 38.7 | 38.1 | 100.0 | 110.2 | ||||||||||
Other (Includes PJM) | 163.7 | 81.1 | 329.6 | 248.3 | ||||||||||
Total Default Supply Revenue | $ | 945.2 | 814.7 | 2,089.1 | 1,983.2 | |||||||||
Other Electric Revenue | $ | 18.5 | 16.4 | 48.7 | 50.4 | |||||||||
Total Electric Operating Revenue | $ | 1,467.3 | 1,289.2 | 3,387.0 | 3,252.7 | |||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
Power Delivery Gas Sales and Revenue ($ in Millions) | 2005 | 2004 | 2005 | 2004 | ||||||||||
Regulated Gas Sales (Bcf) | ||||||||||||||
Residential | .5 | .5 | 5.9 | 6.2 | ||||||||||
Commercial | .5 | .5 | 3.9 | 3.9 | ||||||||||
Industrial | .2 | .2 | .7 | .8 | ||||||||||
Transportation andOther | 1.0 | 1.0 | 4.1 | 4.5 | ||||||||||
Total Regulated Gas Sales | 2.2 | 2.2 | 14.6 | 15.4 | ||||||||||
Regulated Gas Revenue | ||||||||||||||
Residential | $ | 8.7 | 7.8 | 85.2 | 75.3 | |||||||||
Commercial | 6.4 | 5.5 | 49.8 | 42.2 | ||||||||||
Industrial | 1.7 | 1.7 | 7.3 | 6.2 | ||||||||||
Transportation and Other | 1.0 | 1.0 | 3.4 | 3.2 | ||||||||||
Total Regulated Gas Revenue | $ | 17.8 | 16.0 | 145.7 | 126.9 | |||||||||
Other Gas Revenue | $ | 18.3 | 8.8 | 49.6 | 47.1 | |||||||||
Total Gas Operating Revenue | $ | 36.1 | 24.8 | 195.3 | 174.0 | |||||||||
Total Power Delivery Operating Revenue | $ | 1,503.4 | 1,314.0 | 3,582.3 | 3,426.7 | |||||||||
16 |
WEATHER DATA - CONSOLIDATED ELECTRIC SERVICE TERRITORY | |||||||
Three Months Ended | Nine Months Ended | ||||||
2005 | 2004 | 2005 | 2004 | ||||
Heating Degree Days | 7 | 9 | 2,895 | 2,842 | |||
20 Year Average | 32 | 21 | 2,723 | 2,724 | |||
Percentage Difference from Average | -78.1% | -57.1% | 6.3% | 4.3% | |||
Percentage Difference from Prior Year | -22.2% | 1.9% | |||||
Cooling Degree Days | 1,192 | 890 | 1,530 | 1,366 | |||
20 Year Average | 923 | 917 | 1,289 | 1,279 | |||
Percentage Difference from Average | 29.1% | -2.9% | 18.7% | 6.8% | |||
Percentage Difference from Prior Year | 33.9% | 12.0% |
| |||||
Three Months Ended | |||||
September 30, | June 30, | March 31, | December 31, | September 30, | |
Gigawatt Hour Supply (Gwh) | |||||
Merchant Generation output sold into market | 2,382 | 971 | 1,275 | 1,203 | 1,220 |
Full Requirements Load Service | 4,275 | 3,308 | 3,281 | 2,951 | 3,514 |
Total Sales | 6,657 | 4,279 | 4,556 | 4,154 | 4,734 |
Around-the-clock Market Prices | $ 83.24 | $ 49.27 | $ 53.51 | $ 45.38 | $ 45.52 |
On Peak Market Prices | $ 108.62 | $ 63.82 | $ 62.53 | $ 53.36 | $ 56.67 |
Gas Price - M3 (Market Area) | $ 10.43 | $ 7.44 | $ 7.83 | $ 6.84 | $ 5.84 |
Merchant Generation Margin per Mwh | |||||
(Revenue Less Cost of Goods Sold $/Mwh) | $ 42.0 | $ 57.4 | $ 43.1 | $ 55.4 | $ 52.6 |
Merchant Generation Margin Key Drivers: | |||||
(Percentage of Total) (2) | |||||
West to East Hub Congestion | 26% | 2% | 11% | 9% | 8% |
Power & Fuel Hedges | -64% | 8% | -5% | 18% | 23% |
Ancillary Services & Hourly Flexibility Premium | 10% | 27% | 30% | 17% | 17% |
Fuel Switching | 7% | 3% | 11% | 15% | 9% |
PJM Capacity (ICAP) | 8% | 9% | 9% | 7% | 12% |
Energy Spark Spreads | 113% | 51% | 44% | 34% | 31% |
Note: |
|
CONECTIV ENERGY - (continued) | ||||||
Operating Summary | Three Months Ended | Nine Months Ended | ||||
2005 | 2004 | 2005 | 2004 | |||
Gigawatt Hour Supply (Gwh) | ||||||
Merchant Generation output sold into market | 2,382 | (2) | 1,220 | 4,628 | (2) | 3,959 |
Full Requirements Load Service (1) | 4,275 | (3) | 3,514 | 10,864 | (3) | 12,292 |
Total Sales | 6,657 | 4,734 | 15,492 | 16,251 | ||
Operating Revenue: | ||||||
Merchant Generation | $ 267.8 | (2) | $ 229.2 | $ 511.3 | (2) | $ 461.0 |
Full Requirements Load Service (1) | 252.1 | (3) | 225.8 | 633.2 | (3) | 774.7 |
Other Power, Oil, and Gas Marketing | 300.1 | 193.9 | 769.1 | 566.4 | ||
Total | 820.0 | 648.9 | 1,913.6 | 1,802.1 | ||
Cost of Goods Sold: | ||||||
Merchant Generation | 167.8 | 165.0 | 300.7 | 286.7 | ||
Full Requirements Load Service (1) | 263.2 | 209.3 | 643.1 | 752.6 | ||
Other Power, Oil, and Gas Marketing | 300.8 | 185.9 | 769.7 | 554.2 | ||
Total | 731.8 | 560.2 | 1,713.5 | 1,593.5 | ||
Revenue Less Cost of Goods Sold Detail: | ||||||
Merchant Generation | 100.0 | (2) | 64.2 | 210.6 | (2) | 174.3 |
Full Requirements Load Service (1) | (11.1) | (3) | 16.5 | (9.9) | (3) | 22.1 |
Other Power, Oil, and Gas Marketing | (0.7) | (4) | 8.0 | (0.6) | (4) | 12.2 |
Total | 88.2 | 88.7 | 200.1 | 208.6 | ||
Operating and Maintenance Expenses | 28.7 | (5) | 25.0 | 74.3 | (5) | 72.1 |
Depreciation | 8.7 | (6) | 11.3 | 31.5 | (6) | 33.7 |
Taxes Other Than Income Taxes | 0.8 | 0.3 | 2.1 | 0.9 | ||
Other Operating Expenses | 38.2 | 36.6 | 107.9 | 106.7 | ||
Operating Income | $ 50.0 | $ 52.1 | $ 92.2 | $ 101.9 |
Notes: | |
(1) | Since the second quarter 2005, Conectiv Energy has shown all of its Full Requirements Load contracts in the same activity line to better reflect how management views and manages this business. In previous quarters, the POLR load contract was shown separately and the other Full Requirement Load Contracts were included in the Other Power, Oil and Gas Marketing activity. All previous quarters have been updated to reflect this change. |
(2) | Substantially higher generation output due to warmer weather and load growth resulted in higher merchant generation margins. The higher margins were partially offset by negative hedge results during the quarter. For the nine-month period in 2005, higher June through September output and generation margins due to warmer weather and load growth were partially offset by lower output and margins in April and May caused by milder weather and higher fuel prices. |
(3) | Higher Full Requirements Load Service sales resulted from a net increase in load contracts and warmer weather during the third quarter of 2005. For the nine-month period in 2005, Full Requirements Load Service sales were down due to the termination of default service in Maryland in June 2004, partially offset by new SOS and municipal contracts. Lower Full Requirements Load Service margins resulted from higher fuel and energy prices. Full Requirements Load Service is hedged by both contract purchases with third parties and by Conectiv Energy Generation. Conectiv Energy Generation is transfer priced at the PJM price for each hour, multiplied by the Mwhs required by the Full Requirements Load (after reducing the load by the contract purchases). This transfer pricing mechanism subjects the Full Requirements Load Service to some energy price volatility but does provide a partial hedge for the Merchant Generation output. |
(4) | Other Power, Oil and Gas Marketing margins decreased primarily due to a substantial coal contract gain in 2004 and also due to lower wholesale oil marketing results. |
(5) | Higher operating expenses due to a $3.3 million goodwill adjustment related to a small oil marketing investment. |
(6) | Lower depreciation expense due to an adjustment to reflect the results of a recently completed asset life study which increased the estimated remaining life of the power plants. |
|
PEPCO ENERGY SERVICES | ||||||||
Operating Income Summary | Three Months Ended | Nine Months Ended | ||||||
2005 | 2004 | 2005 | 2004 | |||||
Operating Revenue | $ 429.1 | $ 301.4 | $1,101.9 | $ 855.6 | ||||
Cost of Goods Sold | 393.2 | 277.4 | 1,006.3 | 781.4 | ||||
Revenue less Cost of Goods Sold | 35.9 | 24.0 | 95.6 | 74.2 | ||||
Revenue less Cost of Goods Sold Detail: | ||||||||
Natural Gas | 3.4 | (1) | 2.5 | 8.5 | (1) | 8.9 | ||
Electric | 18.6 | (2) | 9.8 | 49.0 | (2) | 28.6 | ||
Energy Services | 13.9 | 11.7 | 38.1 | 36.7 | ||||
Total | 35.9 | 24.0 | 95.6 | 74.2 | ||||
Operation and Maintenance Expenses | 18.1 | 16.4 | 53.3 | 51.7 | ||||
Depreciation | 3.4 | 3.4 | 10.1 | 9.9 | ||||
Other Operating Expenses | 21.5 | 19.8 | 63.4 | 61.6 | ||||
Operating Income | $ 14.4 | $ 4.2 | $ 32.2 | $ 12.6 | ||||
Notes: |
(1) | Natural gas gross margins reflect higher unit margins for the quarter versus 2004 and the first six months of 2005. Volumes sold decreased for the quarter and year-to-date compared to 2004. |
(2) | Electric gross margins improved year-to-date and for the quarter compared to 2004 primarily due to an increase in retail volumes sold and an increase in generation volumes. |
|