Utility Takes Double Punch To Earnings

The ice storm’s punch to Washington Water Power Co.’s bottom line follows an earnings blow earlier this year from the company’s aborted merger with Sierra Pacific Resources.

Together, the left-right jabs will cost company shareholders about $28 million in 1996. That’s a painful cut, but one analysts said should heal rather quickly with help from new wholesale revenues.

“They have some cushion to take this hit,” said Jim Bellessa, Jr. an analyst with D.A. Davidson & Co.

WWP officials Thursday estimated ice storm repairs will cost the utility from $10 million to $15 million, or as much as 14 cents per share.

Shareholders, not ratepayers, will absorb the costs, said Vice President Rob Fukai. The loss will total about 10 percent of WWP earnings for the year, he said.

Coupled with the earlier losses, the company is taking a 20 percent hit to earnings this year.

In June, WWP wrote off $14 million in expenses related to its two-year effort to merge with Sierra Pacific, a utility company based in Reno, Nev.

WWP called off the deal in the face of continued regulatory problems and uncertainty the merger would be approved.

Although the write-offs will hurt the utility’s bottom line this year, Bellessa expects no long-term effect on WWP.

The 10 percent earnings increase over 1995 he was projecting will simply be pushed into 1997, Bellessa said, producing a 20 percent year-over-year boost when combined with other improvements he anticipates.

Bellessa and Lesa Sroufe, a stock analyst with Ragen McKenzie, said WWP’s success in the wholesale electric market reduces the shock of the twin write-offs.

In just the first nine months of the year, wholesale revenues reached $153 million.

“WWP is very competitive,” Sroufe said.

The ice storm write-off, she said, “probably doesn’t reflect on the company’s earning potential.”

Sroufe said WWP stock would suffer only if storm losses became a regular event, not a one-time experience.

Bellessa said the utility’s decision to impose the costs on shareholders rather than customers probably was a good one given the public relations black eye the extended power outage caused.

“I haven’t seen any mismanagement,” he said.

, DataTimes