Sempra Energy’s renewable fleet continues to grow

Sempra (NYSE: SRE) officials on Feb. 26 touted the company’s expanding renewable fleet, talked about various asset deals and reminded financial analysts they are only a minority owner in the idle San Onofre Nuclear Generating Station (SONGS) in California.

Those are a few of the highlights from the company’s fourth quarter earnings call from Sempra Chairman and CEO Debra L. Reed and her management team.

“Our domestic and international utilities performed well; San Diego Gas & Electric put its Sunrise Powerlink transmission line into service; we were awarded bids in Mexico to construct and own approximately $1 billion of natural gas pipelines; we more than doubled our renewable energy generation portfolio; and we completed regulatory filings for our Cameron LNG export project,” Reed said.

Renewable earnings in the fourth quarter were driven primarily by an increase in solar and wind assets over the same period in 2011.

In 2012, earnings for Sempra Renewables increased to $61m from $7m in 2011. Fourth-quarter earnings for Sempra Renewables were $14 million in 2012, compared with a loss of $2 million in 2011, due primarily to the addition of solar and wind assets in 2012, the company said.

Since the beginning of 2012, Sempra U.S. Gas & Power has put into service more than 500 MW of wind and solar power projects stretching from Hawaii to Pennsylvania. The company’s portfolio of renewable energy now totals nearly 850 MW.

Los Angeles and Burbank have signed long-term purchase power agreements (PPAs) for 250 MW from the Copper Mountain 3 solar project. The newest phase of Copper Mountain should be complete in 2015, Sempra said.

The company’s results include a $50m, after-tax gain on partial sale of the Mesquite gas power plant in Arizona.

The sale of the 625-MW block to Salt River Project (SRP) should win final approval soon, Sempra officials said.

Sempra lacks any special insight on San Onofre outage

During the call, Reed stressed that Sempra’s       SDG&E utility is only a minority owner in an idle two-unit nuclear station in San Diego County, Calif. An Edison International (NYSE: EIX) company is the majority owner and operator of the plant.

As a result, Reed said she has no special insight on the restart process or the various government reviews. The units have been out of service since January 2012.

The Nuclear Regulatory Commission (NRC) has yet to submit a detailed timeline for potential return to service of San Onofre Unit 2. In late 2012, majority owner Southern California Edison (SCE) submitted a plan to restart Unit 2 at reduced power for several months.

In addition, the California Public Utilities Commission (CPUC) has launched an investigation into rate recovery for San Onofre 2 and 3 expenses.

Reed did say that Sempra is looking at recovering some purchased power expenses from the nuclear plant insurer.

Q4-12 SDG&E earnings decreased primarily due to $50m in last year’s Q4 related to regulatory approval to recover wildfire insurance premiums.

Overall, Sempra reported 2012 earnings of $859m, or $3.48 per diluted share, compared with $1.3bn, or $5.51 per diluted share, in 2011.

Sempra Energy’s Q4 2012 earnings were $293m, or $1.18 per diluted share, compared with Q4 2011 earnings of $285m, or $1.18 per diluted share. Excluding the receipt from Kinder Morgan, adjusted earnings in the fourth quarter 2012 were $268m, or $1.08 per diluted share.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.