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NV Energy, Inc., (NVE)

Q3 3009 Earnings Call

October 26, 2009 10:00 am ET


Britta Carlson - Manager, Investor and Shareholder Relations

Michael W. Yackira President, Chief Executive Officer, Director

William D. Rogers Chief Financial Officer, Corporate Senior Vice President, Treasurer


Dan Eggers - Credit Suisse

Greg Gordon - Morgan Stanley

Paul Patterson - Glenrock Associates

Brian Russo - Ladenburg Thalmann

Emily Christie - RBC Capital Markets

Michael Lapides - Goldman Sachs

James Dobson - Wunderlich Securities

Phyllis Gray - Dwight Asset Management

Edward Heyn - Catapult Capital Management

Steve Fleishman - Merrill Lynch



Good morning ladies and gentlemen. At this time I would like to welcome everyone to the NV Energy 2009 Third Quarter Earnings Conference Call. (Operator Instructions). As a reminder, today’s call is being recorded. With that being said I will now turn the conference over to Britta Carlson. Please go ahead.

Britta Carlson

Good morning and thank you for joining us to review NV Energy’s results for the third quarter of 2009. In addition to the press release that was issued over the wire earlier today, we expect to file our third quarter Form 10-Q for the 2009 period with the SEC later this week.

I would like to remind you that comments we make during this call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the future performance of NV Energy, Inc. and its subsidiaries, Nevada Power Company and Sierra Pacific Power Company, both doing business as NV Energy.

These statements are current expectations and as such are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include the factors discussed in the Company's Form 10-Q for the periods ended March 31, 2009 and June 30, 3009 and the Form 10-K for the year ended December 31, 2008. I would also like to mention that reconciliations of certain non-GAAP financial information presented during today's call can be found in our earnings press release, which is posted on our company web site at

With me this morning are Michael Yackira, President and Chief Executive Officer, and Bill Rogers, Senior Vice President and Chief Financial Officer. Bill will begin our call this morning by reviewing our third quarter 2009 results and discuss key financial drivers and trends. Michael will then provide an update on the corporate strategy, including recent industry developments.

I will now turn the call over to Bill Rogers.

Bill Rogers

Thank you, Britta. Good morning everyone and thank you for joining us. In our earnings press release we included our company’s income statements, certain financial highlights from our balance sheets and operating data. Rather than repeat our financials I will begin with a review of our earnings, gross margin, and revenue drivers on a quarter-to-quarter basis. Following this review I will discuss forward-looking load forecasts, capital expenditure plans, and cash flow.

As released this morning, NV Energy is very pleased to report net income of $183 million or $0.78 per share in the third quarter of 2009, as compared with earnings of $151 million or $0.64 per share in the third quarter of 2008. The earnings increase in the third quarter of 2009 versus the same 2008 period was the result of both top line growth from the recent rate case and cost discipline.

With respect to our revenue, we are pleased that gross margin increased approximately $89 million or 19%. Improvement in our revenue margin, or gross margin, was a result of higher general rates in Southern Nevada effective July 1st of this year. As previously discussed, this was largely the result of investments in generating facilities that were completed in 2008. Our NV Energy Southern territory contributed 77% of consolidated gross margin and the electric and gas businesses of NV Energy’s northern service territory contributed 22% and 1% respectively.

Our retail electric sales in Southern Nevada were down 2.9% in the third quarter of 2009 compared to 2008. Northern Nevada retail electric sales declined 5.7% in the same quarter.

Residential customer growth is essentially flat on a year-on-year basis.

As noted in our earnings press release we have had growth in commercial and industrial customers. More importantly, due to the business lines of our industrial customers, namely hotels, gaming, and mining, we have not lost any industrial customers or load and we do not anticipate any loss in industrial customers looking ahead.

The weather was not materially different quarter-to-quarter therefore the volume sales decline was the result of changes in customer usage patterns not directly attributable to weather.

Our system peak for 2009 was 5,586 megawatts in Southern Nevada and 1,554 megawatts in Northern Nevada. The Southern Nevada 2009 peak was 1.5% higher compared with our 2008 peak of 5,504 megawatts. Summer weather in 2009 was comparable to summer weather in 2008; therefore we believe the system peak increase provides further evidence of overall customer stability. We attribute this to stable commercial and industrial sales which offset a modest decline in residential sales.

On the cost side, we are pleased with our expense discipline in this lower growth environment. On a quarter-to-quarter operations and maintenance expenses were essentially unchanged despite owning and operating more plant, specifically Clark and Higgins and despite having higher pension expenses. Continued expense discipline will be imperative to achieve desired results in this low-growth environment.

Having reviewed the quarter-to-quarter comparison I will now discuss forward-looking load forecasts, capital expenditure plans, and cash flow.

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