HOUSTON, April 25, 2003 — Texas Genco Holdings Inc., an 81 percent owned subsidiary of CenterPoint Energy Inc., reported a net loss before cumulative effect of accounting change of $11 million, or $0.14 per diluted share for the quarter ended March 31, 2003, compared to a net loss of $35 million, or $0.43 per diluted share for the same period of 2002.
Net income for the period was $88 million or $1.10 per diluted share compared to a net loss of $35 million, or $0.43 per diluted share for the same period in 2002. The first quarter of 2003 reflects the benefit from the cumulative effect of accounting change of $99 million, or $1.24 per diluted share, from the implementation of SFAS No. 143, “Accounting for Asset Retirement Obligations.”
The Texas electric market opened to retail competition on January 1, 2002. At that time, CenterPoint Energy’s generation business, Texas Genco, became a separate reporting unit and began selling electricity in the Electric Reliability Council of Texas (ERCOT) at prices determined by the market. Thus, the first quarter of 2003 is the first time meaningful quarter to quarter comparisons can be made.
“Wholesale electricity prices were much higher in early 2003 due to substantially higher natural gas prices. These higher prices led to increased capacity auction revenues in the first quarter, particularly for our solid fuel baseload products,” said David Tees, president and chief executive officer of Texas Genco. “As a result, the first quarter loss in 2003 was much less than the same quarter last year. The first quarter is typically our lowest performing quarter due to seasonal revenue effects and the scheduling of planned maintenance on our generating units. In addition, the first quarter 2003 reflected a forced outage of STP Unit 2.”
The company owns a 30.8 percent interest in the South Texas Project Electric Generating Station (STP), a nuclear generating plant consisting of two 1,250 MW units. STP Unit 2 was taken out of service in December 2002 as a result of non-safety related mechanical failures and was returned to service on March 14, 2003. The added cost of replacement energy negatively impacted gross margin by approximately $23 million for the quarter and the outage was also a major contributor to a $10 million increase in operation and maintenance expense.
“The higher electricity prices reflected in this quarter are continuing, and Texas Genco is benefiting through improved capacity auction revenues,” said Gary L. Whitlock, executive vice president and chief financial officer of Texas Genco. “We’re pleased with Texas Genco’s progress. Taking into account continued high auction prices, together with the impact of unplanned plant outages, especially at our baseload facilities, we are maintaining our earnings guidance for 2003 of $1.10 to $1.30 per diluted share.”
The company paid its first quarterly dividend of $0.25 per share of common stock on March 20, 2003.