Huge write-offs zap TXU earnings

TEXAS - TXU Corp. reported a net loss of $497 million was revenue declined and the company took two big write-offs, including one related to the cancellation of eight coal-fired power plants, which it has made a condition of its pending $45 bil ion buyout.

The state's biggest power company had announced that it would report a $463 million after-tax charge to cover money spent on the planned coal plants or that it will have to pay to terminate contracts for equipment and construction.

TXU also said it took a $449 million after-tax charge to reflect the decreased value of fuel-hedging contracts, which can vary widely with the price of natural gas. Not counting one-time items, TXU said it would have earned $444 million, or 96 cents a share, compared with $529 million, or $1.12 a share, in the same quarter a year ago. The first-quarter figure was well below Wall Street's expectation of $1.11 a shar , but the company's shares still rose 46 cents May 9 to close at $66.62.

In a research note to clients, Wachovia Capital Markets analyst Samuel Brothwell noted that TXU's shares will mostly move in response to investors' outlook for the pending buyout by an investment group, which is valued at $69.25 a share. "It is clear th t the market thinks the prospects for closing the deal have improved over the past month," Brothwell wrote recently. Gregory Phelps, who holds an undisclosed number of TXU shares as part of $5 billion in assets he oversees for MFC Global Investment Management in Boston, told Bloomberg News that the company "tried to get as many negative items as they could out of the ay this quarter.

Certainly you don't want to show robust earnings when you're before regulators trying to get this deal approved." The Texas Legislature has been debating the buyout. TXU said its quarterly revenue fell nearly 28 percent as the company's baseload electricity generated fell 12 percent compared with a year ago. The company said Unit 1 of its Comanche Peak nuclear plant was down 34 days during the quarter to replace ste m generators, while coal-fired plants saw higher maintenance. One coal-fired plant had an "extended outage" to repair a failed main transformer. The company also saw continued customer losses in North Texas.

Total customers declined 6.4 percent, despite a 19 percent gain outside North Texas.

Related News

newfoundland power

Quebec's electricity ambitions reopen old wounds in Newfoundland and Labrador

OTTAWA - As Quebec prepares to ramp up electricity production to meet its ambitious economic goals, the government is trying to extend a power deal that has caused decades of resentment in Newfoundland and Labrador.

Around 15 per cent of Quebec's electricity comes from the Churchill Falls dam in Labrador, through a deal set to expire in 2041 that is widely seen as unfair. Quebec Premier François Legault not only wants to extend the agreement, he wants another dam on the Churchill River to help make his province what he has called a "world leader for the green economy."

But renewing that…

READ MORE
DOE

Energy Department Announces 20 New Competitors for the American-Made Solar Prize

READ MORE

powerlines

Ontario, Quebec to swap energy in new deal to help with electricity demands

READ MORE

ontario peak perks

Ontario Launches Peak Perks Program

READ MORE

Dr Henri Paillere,

Opinion: Nuclear Beyond Electricity

READ MORE