Warm Summer Lifts 3Q Utility Earnings

A warmer summer in 2015 heated power utilities’ earnings but were slightly offset by a stronger dollar in the third quarter, ratings service Fitch reported.

On average, third-quarter earnings grew 5 percent year over year for the U.S. utilities, gas and power sector. The driving factors included warmer weather, higher margins from base rate increases and load growth, according to Fitch.

Duke Energy, for instance, indicated that warmer weather within its system was worth about 9 cents per share in earnings, according to its third-quarter report. The company indicated that 2015 was the first above-normal summer weather since 2012.

Those utility holding companies listed in the Fitch report which provided preliminary 2016 guidance showed an average 3.3 percent increase in mid-point EPS. NextEra Energy, for instance, expects to generate $5.75 to $6.25 in EPS next year.

A strong dollar hampered utilities which have international operations, according to Fitch. AES lowered its 2016-2018 adjusted EPS expectations due to devaluation in foreign currencies and higher interest rates in Brazil, among other factors.

Sempra’s 3Q earnings fell 40 cents per diluted share, although its South American units gained $11 million on higher operating earnings and lower income-tax expense.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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