Sunrise Powerlink benefits SDG&E 3Q12 earnings

San Diego Gas & Electric’s (SDG&E) strong 3Q12 results were benefited by $12m of increased transmission earnings, including the impact of the Sunrise Powerlink, Sempra Energy CFO Joseph Householder said in the company’s 3Q12 earnings call on Nov. 6.

SDG&E is a subsidiary of Sempra (NYSE:SRE).

Earnings for SDG&E in 3Q12 rose to $174m from $113m in the year-ago quarter.

Additional influencers on SDG&E’s earnings for the quarter were lower taxes and reduced expenses related to the 2007 wildfires, Sempra said.

Sempra reported 3Q12 earnings of $268m, or $1.09 per diluted share, compared with third-quarter 2011 earnings of $289m, or $1.20 per diluted share.

“Our solid operating performance in the third quarter and through the first nine months keeps us on track to meet our 2012 earnings-per-share guidance of $4 to $4.30, excluding the impairment charges and assuming a final California Public Utilities Commission rate decision for our California utilities comes by year-end,” Sempra CEO Debra Reed said in a statement.

The Sempra Renewables segment generated earnings of $13m, up from $1m for the same quarter last year. The increase was driven by the addition of solar and wind assets, the company said.

“I am pleased to announce that we are finalizing agreements with the Salt River Project, the utility in Arizona, to sell a 625-MW block of our 1,250-MW Mesquite natural gas plant,” Householder said. “We are expecting to see a price of approximately $600 per kilowatt.”

Sempra anticipates that, pending regulatory approvals, the sale will be finalized early next year.

“We are on the path to exit the merchant generation business,” Reed said on the earnings call. “We don’t see it as part of our long-term strategy. We’ve sold half of Mesquite to the Salt River Project, and we have about 250 MW sold of the remaining block of Mesquite.”

Third-quarter 2012 earnings included a $60m non-cash charge related to a write-down on Sempra U.S. Gas & Power‘s 25% stake in the Rockies Express Pipeline. This $60m charge, in addition to a $179m charge taken in 2Q12, totaled $239m for the first nine months of 2012. Nine-month results in 2011 included a gain of $277m in 2Q11, reflecting the write-up in value of Sempra International’s South American utility investments.

Excluding the $60m charge in 2012, adjusted third-quarter earnings increased to $328 million, or $1.33 per diluted share, in 2012 from $289 million, or $1.20 per diluted share, in 2011.

Sempra’s earnings for the first nine months of 2012 were $566m, or $2.31 per diluted share, compared with $1b, or $4.32 per diluted share, during the first nine months of 2011. For the nine-month period, adjusted earnings increased to $805m, or $3.29 per diluted share, in 2012 from $769m, or $3.18 per diluted share, in 2011.

Sempra California utilities, SDG&E and Southern California Gas, serve more than 20 million consumers, and the company’s other businesses – Sempra U.S. Gas & Power and Sempra International – develop and operate critical energy infrastructure and provide gas and electricity services in North America and South America.

Earlier this year, Sempra consolidated Sempra Generation, Sempra Pipelines & Storage and Sempra LNG into two new operating units: Sempra International and Sempra U.S. Gas & Power. Sempra International is comprised of two new reporting segments: Sempra South American Utilities and Sempra Mexico. Sempra U.S. Gas & Power also is comprised of two new reporting segments: Sempra Renewables and Sempra Natural Gas.

Southern California Gas earnings were $71m in 3Q12, compared with $81m in 3Q11.

In 3Q12, Sempra South American Utilities had earnings of $40m, compared with earnings of $50m in last year’s third quarter, and Sempra Mexico recorded third-quarter earnings of $54m in 2012, up from $47m in the same period in 2011.