Dominion's Q3 earnings down 31.8% to US$392M on higher costs, new air pollution regulations, hurricane outages; revenue down about 4% to US$3.8B
October 28, 2011
– Energy provider Dominion Resources Inc. said Friday higher costs including those related to the August earthquake that shut down one of its nuclear plants, new air pollution regulations and hurricane outages dragged down its third-quarter profit.
Dominion reported earnings of $392 million, or 69 cents per share, for the period ended Sept. 30, down from $575 million, or 98 cents per share, a year ago.
The quarter included pre-tax charges of $263 million, a bulk of which came from widespread outages during Hurricane Irene. About 1.2 million customers were impacted by the storm and it was the company's second-largest restoration effort.
Other costs included $21 million mostly for inspections following the shutdown of the reactors at its North Anna nuclear power station after the 5.8-magnitude earthquake; and $55 million in charges related to excess emission allowances from a federal new air pollution rule.
But the Richmond-based company said its operating earnings fell about 10 percent to $338, or 95 cents per share, on lower generation margins, weather-related sales and contributions from producer services. It uses operating earnings that exclude certain items as its primary performance measurement.
Revenue fell about 4 percent to $3.8 billion as higher rates helped offset declines in electricity use.
Analysts polled by FactSet expected earnings of 93 cents per share on revenue of $3.85 billion.
Dominion was "twice challenged by Mother Nature, not just in the same quarter, but during the same week," CEO Thomas F. Farrell II said in a conference call with investors. The Virginia-centered earthquake rattled the East Coast on Aug. 23, and Hurricane Irene swept through four days later.
"We've done some research and cannot find an occasion, during this century or the last, when a particular area was hit by both a significant earthquake and a major hurricane within a seven-day period," Farrell said.
Farrell said despite those challenges, the company was "up to the task and performed well."
Dominion narrowed its full-year adjusted earnings forecast to between $3.05 and $3.20 per share.
The company also said the 585-megawatt Virginia City Hybrid Energy Center in Wise County is more than 93 percent complete and is on schedule for operations by next summer. Site work and other preparations are ongoing for its 1,300-megawatt gas-fired combined cycle plant in Warren County. Pending regulatory approval, Dominion expects construction will start next spring.
Dominion said it has more than 40 electric transmission projects planned over the next five years to help meet growing demand and maintain reliability.
The company also said it has started construction on a site on the Ohio River in Natrium, W.Va., for a large gas processing plant in the Marcellus shale region that is expected to be in service by late 2012. It also started construction for the Appalachian Gateway pipeline between West Virginia and Pennsylvania, which is expected to be in service next year.
Dominion Resources is one of the nation's largest producers and transporters of energy and has the nation's largest natural gas storage system. It serves retail customers in 15 states.
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