HALIFAX (CP) - Emera Inc. (TSX:EMA) ended 2005 with a $37.7-million fourth-quarter profit, up 20 per cent from a year earlier, thanks to a revised natural gas supply pricing agreement in November that offset higher coal and oil prices at main subsidiary Nova Scotia Power Inc.
However, Emera also had a 6.6 per cent decrease in profits for the year as a whole, with 2005 net earnings falling to $121.2 million
Nova Scotia Power contributed $91 million in consolidated earnings for 2005, down 15 per cent from 2004 as its fuel costs rose by $71 million.
Emera said the decrease in annual earnings was only partially offset by an approximately five per cent electricity rate increase at Nova Scotia Power in the spring of 2005, and the deferral of first-quarter corporate taxes in advance of that rate increase coming into effect.
"The shortfall in NSPI earnings was partially offset by higher earnings in Emera's other operations," Chris Huskilson told analysts in a Monday conference call.
Nova Scotia Power applied last year for a 13 per cent increase in the rates it charges its electricity customers, retroactive to Jan. 1, 2006.
A three-member panel of the Nova Scotia Utility and Review Board is reviewing the application, after a public review process that concluded in mid-December.
"We're expecting the decision soon" Huskilson said.
"We believe we put forward a compelling case and, while we cannot predict the outcome, I would characterize us as cautiously optimistic that we will have a result that will return us to a more solid financial footing."
Emera's 2006 outlook is heavily dependent on the outcome of that rate increase decision, Huskilson added.
The company is investigating potential geographic expansion beyond its current base in the Canadian Maritime provinces and U.S. northeast, Huskilson said.
The areas under consideration include Central and Western Canada and select markets in the continental United States, he told analysts.
"I think at this point we are staying quite broad and we're seeing the U.S. as an area of greater opportunity. We wouldn't narrow it at this point," Huskilson said.
"We still have a significant portion of our earnings coming from the Nova Scotia marketplace," Huskilson said. "We've seen some ups and downs in the last few years here and we'd like to be able to diversify from that."
Currently, Nova Scotia Power accounts for about 75 per cent of Emera's overall earnings and would like that to fall to about 65 per cent over the next five years, Huskilson said.
Bangor Hydro Electric, Emera's electricity transmission and distribution utility in Maine, contributed $4 million to consolidated net earnings in the fourth quarter, a slight decrease from last year.
The Bear Swamp hydroelectric facility in Massachusetts, foreign exchange gains, and the capitalization of business development expenses related to the Bear Swamp acquisition contributed to the earnings increase.
Emera's earnings per share were $1.11 for the year ended Dec. 31, 2005, compared to $1.20 in the prior year; and 34 cents for the fourth quarter of 2005, compared to 30 cents last year.
In the fourth quarter, higher coal and oil prices increased fuel expense in NSPI by $16 million. This was offset by a revised agreement on natural gas supply pricing, reached in November, which was more favourable than had been estimated.
Nova Scotia Power Inc. announced in November that it had a deal with its natural gas supplier, Calgary-based Shell Canada (TSX:SHC), projecting fuel costs will be lower by an estimated $22 million as a result of the change in the contract.
The original long-term agreement, signed in 2000 for a 10-year period, was very favourable to Nova Scotia Power because it was based on natural gas prices that were very low compared to current prices.
However, on Nov. 1, 2004, the original price came up for renegotiation and the two parties couldn't agree. The matter went to a binding arbitration panel and its decision resulted in a $24-million adjustment to NSPI's fuel expense for 2005, all of which was recorded in the final quarter.
Emera shares traded Monday at $20.07, down eight cents, at the Toronto Stock Exchange. |
