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Edison International takes $2.52 billion charge


By the OGJ Online Staff

HOUSTON, Apr. 17, 2001—Edison International Tuesday reported a 2000 fourth quarter loss of $2.55 billion because of a $2.52 aftertax charge at its utility unit Southern California Edison Co.

Ted Craver, Edison’s chief financial officer, in a conference call also said there is a “strong potential in the first quarter” of write-offs, if there are delays implementing a recently signed rescue package with California Gov. Gray Davis under which the utility will sell its transmission system to the state. The company has yet to close the books on the 2001 first quarter.

For all 2000, Edison reported a net loss of $1.9 billion or $5.84/share. Excluding the effect of the charge, Edison International’s year 2000 earnings were $1.74/share, down from $1.79/share in 1999. Southern California Edison took the charge because it has been unable to recover its wholesale power costs under a retail rate freeze imposed under California’s deregulation plan.

Edison Chairman John Bryson said assuming the memorandum of understanding with Gov. Davis is implemented or, alternatively, courts uphold Edison’s legal claims to recover its undercollected costs, the charge against earnings could later be reversed. The agreement with the governor is subject to regulatory and legislative approval.

Because of the extreme uncertainties around the California situation and the impact of the California situation on the credit of the rest of the company and on the expense load of the rest of the company, “we are not providing any earnings guidance at this time,” Craver said.

He said Southern California Edison’s cash position will decline $300-400 million due to a $45 million payment to the California Department of Water Resources for January and February power purchases and for payments to qualified facilities, smaller power generators that contracted directly with the utility.

After that, Craver said the company projects cash will stay roughly stable, although it is “hard to be precise on that.” He said deadlines built into the deal with the governor are to a large degree based on its cash forecast. At the end of the 60-day period, Craver forecast the company will have about $1.7 billion on hand and at the end of the 120-day period, cash is still forecast to be at about that same level.

Separately, Edison Mission Energy, a unit of Edison International, said it may sell two of the UK’s biggest power plants. Edison said it appointed Goldman Sachs & Co. to examine the potential sale of Fiddler’s Ferry plant in Cheshire and the Ferrybridge plant in Yorkshire. Edison would have three plants in the UK after the plants are sold.

The company said the proposed sale reflected tough competition in the UK market and is unrelated to the US problems.