Progress Energy's state profits soar

Published August 9, 2006

Progress Energy Inc. lost $47-million last quarter, but profits from its Florida operations soared 770 percent, a financial windfall reported as many Floridians are being stunned by sharp increases in their summer electric bills.

Progress Energy Florida contributed $87-million to the North Carolina parent company’s profits last quarter, up from just $10-million during the same period a year ago. Why the enormous jump?

The company says it’s the result of hot weather, customer growth and lower expenses for operations and maintenance. Last year’s results included writeoffs from unrecoverable storm costs.

But the company also is enjoying the results of higher rates Florida customers began paying Jan. 1. Electricity sales were up 5.8 percent in terms of kilowatt hours, but a whopping 26.3 percent in terms of revenues. After fuels and other pass-through revenues were subtracted, revenues were up 7.9 percent.

Florida residential customers now pay $109.56 for the first 1,000 kilowatt hours of electricity per month, $11.78 more than they did a year ago. The company has said it raised electricity rates to offset the higher costs it must pay for fuel used to ruin its power plants.

Overall, the company had $2.5-billion in revenues, 10.3 percent more than last year. Progress Energy Florida provided $1.5-billion. The financial figures are for the three months that ended June 30.

Results for the next quarter, which includes the hot weather months of July, August and September, will be announced in the fall. Progress Energy Florida already has disclosed that residential customer bills in the $500 to $1,000 range more than doubled in the Tampa Bay area to 4,348 in June, up from 1,984 in June 2005.

Amid such big gains, how did Raleigh-based Progress Energy Inc. manage to lose $47-million? Mostly through losses on discontinued operations, including generating plants in Florida’s DeSoto County and North Carolina’s Rowan County, which are being sold to Atlanta-based Southern Co.

Progress Energy also took writeoffs on the value of its synthetic fuel business, a form of specially-treated coal. Those operations in Kentucky and West Virginia were shut down in May.

The $47-million loss for the quarter amounts to 19 cents per share and compares to a net loss of $1-million, or 1 cent per share, for the same period a year ago.

Although Progress Energy Florida was the more profitable partner for the most recent quarter, its sister affiliate -- Progress Energy Carolina -- is still in the lead over the last six months.

For the first half of the year $161-million in profits came from the Carolinas and $139-million from Florida. The Carolina unit sold more power during the winter, but a mild spring led to a dropoff in demand. In Florida the results were reversed, with a mild winter and a hot spring.

The Florida unit is enjoying strong customer growth, with the net addition of 35,000 customers during the last quarter. Wholesale revenues also rose as a result of new contracts.

Progress Energy plans to discuss the company’s financial performance with analysts and investors in a conference call today.

Tampa Electric, part of TECO Energy and the other major power provider in the Tampa Bay area, reported its earnings in late July. In sharp contrast to Progress Energy Florida’s 770-percent profit gain, Tampa Electric’s profits declined in the quarter to $37.1-million from $38.8-million in the same period of 2005.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.