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Westar Energy CFO Tony Somma on Feb. 26 said that Westar‘s total capital expenditure program for the five years from 2014 to 2018 is about $3.5 billion.
“Transmission, the largest component at over $1 billion, accounts for one-third of the total [capex],” he said during an earnings conference call, noting that all of the $1 billion investment will be dedicated to projects that are not subject to FERC Order 1000.
The annual capex is about $679 million, $591 million, $667 million, and $692 million for 2015, 2016, 2017, and 2018, respectively, according to the company’s Feb. 25 Form 10-K. Together, transmission and distribution investments comprise 49 percent, 61 percent, 57 percent, and 55 percent, respectively, of the annual totals, according to TransmissionHub.
For the 2015-2018 period, Westar is planning transmission investments of $186.9 million, $203.4 million, $228 million, and $221 million, respectively, and distribution investments of $147.7 million, $157.3 million, $153 million, and $160.4 million, respectively.
In 2014, the company invested a total of $316.3 million in transmission and distribution, comprising $179.1 million in transmission and $137.2 million in distribution. The company’s total capex program for 2014 was $814 million.
Westar President and CEO Mark Ruelle said during the Feb. 26 call that while Westar continues to prepare for potential Order 1000 projects in its service region, the Southwest Power Pool (SPP) is moving very slowly on those projects, “particularly in light of the uncertainties with the [U.S. Environmental Protection Agency’s] proposed carbon rule.”
He noted that SPP is likely to approve only one project, if any, in its first round of competitive solicitations.
In its Form 10-K filing, Westar said that, due in part to the long-term nature of transmission planning activities, coupled with the fact that Order 1000 is in its very early stages, the company is unable to predict the effect of Order 1000 on future earnings. Westar’s forecast capital expenditures, therefore, do not account for investments associated with potential Order 1000 projects, the company said.
Westar on Feb. 26 reported earnings of $313 million, or $2.40 per share, for 2014, compared with earnings of $293 million, or $2.29 per share, for 2013. Earnings for 4Q14 were $43 million, or 33 cents per share, compared with earnings of $41 million, or 32 cents per share, for 4Q13. In addition, Westar issued 2015 earnings guidance of $2.25 to $2.45 per share.
The company said that higher net income for 2014 was driven primarily by higher prices resulting from investments in air quality controls and transmission infrastructure and an increase in retail sales led by industrial customers. In addition, the increase in revenues was partially offset with higher operating costs primarily due to planned maintenance, selling, general and administrative and depreciation expense.
Westar reported 4Q14 transmission revenues of $64.5 million, compared with $53.5 million in 4Q13, and 2014 transmission revenues of $256.8 million, compared with $210.3 million in 2013.
Westar also said that higher net income for 4Q14 was driven primarily by higher prices, offset by an increase in selling, general and administrative costs and higher depreciation.