Crisis helps drive energy supplier's profits upward

Duke Energy benefited from the price spike because it owns four California power plants that generate a total capacity of 3,300 megawatts, enough to supply nearly 500,000 homes with power. The company didn't break down its profits by state.

Duke earned 81 cents per share in 1999's final quarter.

Although industry analysts knew rising electricity prices would work in Duke's favor in the quarter, the company still managed to exceed the high expectations. Analysts polled by First Call/Financial Thomson expected Duke to earn 88 cents per share.

For all of 2000, Duke Energy earned $1.78 billion, or $4.78 per share, up from $1.51 billion, or $4.08 per share, in 1999.

Duke's shares rose $1.94 to finish at $71.94 Thursday in anticipation of the earnings announcement, which the company reported several hours after the stock market closed.

The company is the first major provider of California electricity to disclose how much it prospered from market conditions that have pushed the state's two largest utilities, Pacific Gas and Electric Co. and Southern California Edison, to the brink of bankruptcy.

Other power generators are expected to register profit gains much larger than Duke, which has most of its operations outside of California.

Houston-based Dynegy's fourth-quarter profits are expected to double. Other major California power generators scheduled to release their results during the next three weeks include Reliant Energy, Southern Energy and San Jose-based Calpine Corp.

The generators are releasing their robust profits against a backdrop of rolling blackouts in California, creating a potentially awkward situation.

On one hand, the companies are hoping the profits will lift their recently slumping stocks. But they do not want to provide ammunition to Californians who believe out-of-state generators are gouging the state.

"They have a bit of a juggling act to do," said analyst Tim Winter of A.G. Edwards & Sons in St. Louis.

The financial distress of California's utilities is starting to infect the out-of-state generators.

With their cash reserves evaporating and no borrowing power, both PG&E and SoCal Edison have started defaulting on their bills.

The volatile market conditions in California also have hurt the power generator's stocks. Thursday's closing price of Duke's stock represented a 20 percent decrease from the company's record high of $90.44 reached during the fourth quarter.

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