Edison Sharply Boosts Its 2004 Profit Forecast

Edison International reported a second-quarter loss of $374 million Friday, but signaled that its 2004 profit could exceed analysts’ estimates by as much as 27% thanks in part to a rate increase for its Southern California Edison unit.

The news sent shares of the Rosemead company up 93 cents on the New York Stock Exchange to $26.80 -- the stock’s highest close since early 2000.

Also Friday, the company’s Edison Mission Energy production unit said it had agreed to sell 13 of its 14 international power plants to a consortium consisting of International Power and Mitsui & Co. for $2.3 billion. The 13 power plants can generate 5,400 megawatts.

Edison said it expected to take in a total of $2.5 billion from the sales of those plants and its stake in Contact Energy, a New Zealand utility.

During a conference call Friday with analysts and investors, Chief Executive John E. Bryson said Edison was focused on fully recovering from the 2000-01 California energy crisis. He has been trying to shrink debt from that period by selling assets and pushing for rate increases.

“Two key steps of this past month have moved us down the road,” said Bryson, referring to the sales of overseas investments and the rate changes.

Edison International’s second-quarter loss of $1.15 a share contrasted with a gain of $24 million, or 7 cents, a year earlier. Second-quarter revenue fell 6.6% to $2.9 billion.

The loss was attributed to the cancellation of a lease by a subsidiary on an Illinois generating plant and the loss of a contract to sell power to Exelon Corp. Edison Mission Energy recorded a charge of $586 million, or $1.80 a share, for costs related to ending the lease on the Collins Power Station.

Excluding one-time items, Edison earned 32 cents a share, compared with 37 cents for the same period last year. Analysts had been expecting profit before one-time items to total 46 cents a share, according to Thomson First Call.

Edison’s Southern California Edison subsidiary reported second-quarter profit of $242 million, compared with $223 million a year earlier. The state Public Utilities Commission approved a rate increase of about 3% in July to cover costs to overhaul and expand Edison’s power grid.

With the rate increase approved and the sale of the international portfolio out of the way, Bryson forecast 2004 net income of $2.10 to $2.20 a share. Analysts had forecast $1.73 a share this year, according to Thomson First Call.

“There are a lot of positive drivers coming out of the general rate case and the asset sales,” Michael Worms, an analyst at Harris Nesbitt in New York told Bloomberg News. “Earnings for the year are significantly higher than anyone was expecting.”

The bullish profit outlook aggravated consumer advocates who opposed the rate increase for Southern California Edison.

“It’s so galling because they were falling all over themselves telling the commission that what the commission was about to approve wasn’t nearly enough,” said Bob Finkelstein, executive director of the San Francisco-based Utility Reform Network. “You’ve got to hope that this, if nothing else, adversely affects their credibility.” Edison declined to respond to the remarks.

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Recharged stock

Shares of Edison International, monthly closes Jan. 1999: $27.81 April 2001: $9.85 Friday: $26.80 (up 93 cents)

Source: Bloomberg News