The California energy crisis has proved a bonanza for companies that generate or market electric power.
Earning statements from the fourth quarter of 2000 suggest how much money has gone out of state to buy power.
Enron, the world's largest energy company, reported its fourth-quarter profit last year was up $88 million from 1999, rising to $347 million. But this doesn't come close to the real story. Houston-based Enron, which lost money in other markets, covered its losses with its wholesale services division. That division handles sales to the California market shows, and made $777 million in pretax profits.
"Our markup is very small," says Mark Palmer, a spokesman for Enron. "California is a very, very small percentage of our profitability."
The claim for Duke Power is similar. Duke provides about 5 percent of California's energy needs, and the rising prices helped it to fourth-quarter earnings of $284 million. Compare this to 1999 fourth-quarter earnings, when Duke lost $189 million.
Another Surge in Earnings Expected
Calpine, which operates 26 power plants throughout Northern California and is planning to build more, saw diluted fourth-quarter earnings rise to 30 cents a share, and annual earnings rise to $1.05. Next year, Calpine predicts another surge in earnings of almost 20 percent.
Dynergy, another Texas-based power marketer active in California, saw fourth-quarter earnings more than double, from $45 million in 1999 to $106 million in 2000. Net income for the whole year 2000 more than tripled, from $146 million to $452 million.
These trends are expected to be mirrored in fourth-quarter reports from the Williams Cos., Reliant Energy and Southern Energy.
Meanwhile, negotiations for a long-term fixed-price contract to stabilize California's energy expenditures continue in Sacramento. The main spur to a settlement: the likely bankruptcies of California's two biggest investor-owned utilities, Pacific Gas and Electric and Southern California Edison.
These would cause multibillion-dollar headaches, not just for the state, but for the utilities' creditors, including many of the firms who enjoyed such a boom quarter at the close of the year 2000.