Revenue rolls in at EPCOR

August 8, 2001

Revenue rolls in at EPCOR
Deregulation no benefit to consumers, critic charges

By DAVID SANDS and DAN HEALING, EDMONTON SUN

Power contracts and last year's purchase of the retail operations of Utilicorp in Alberta have more than doubled EPCOR's net income and quadrupled its revenue so far this year.

But the $166-million windfall won't mean lower rates for its 620,000 Edmonton and Alberta consumers, EPCOR's corporate controller said yesterday.

In fact, Mark Wiltzen said EPCOR intends to apply to recover a $159-million shortfall from future consumers, a deficit caused by the difference between the province's regulated-rate option and the cost of buying power from suppliers.

"Some of the profits go into dividends that go back to the city," said Mark Wiltzen.

"And a large chunk of it also will go into reinvestment in new power plants.

When asked if the profits would subsidize future power rates for EPCOR customers, he said, "Not directly."

The earnings and revenue growth by EPCOR show that companies, not consumers, are benefiting from deregulation, Liberal energy critic Kevin Taft said yesterday.

"It shows the scale of the profits that the power companies are getting under deregulation," said the Edmonton Riverview MLA.

"It reflects who is benefiting from deregulation and it isn't the consumer.

"On Jan. 1, we went from paying 4.7 cents/kWh for electricity and now it's 11 cents.

"We are paying the highest rates in the country and the power companies are benefiting from that."

Results quietly posted on its Web site last week show that EPCOR's six-month net income as of June 30 was $166 million on revenue of $2.142 billion.

In the first half of the previous year, the company earned just $67.2 million on revenue of about $573 million.

For the second quarter, EPCOR noted net income of $76 million, up from $30 million last year.

Revenue of $952 million was up by $656 million from the same period last year.

"Approximately $600 million of the increase in revenue is attributed to sales to large commercial/industrial customers and to the more than doubling of EPCOR's Albertawide customer base through the acquisition of Utilicorp's Alberta retail business last year," the utility stated in its release.

Wiltzen refused to say how much was contributed by each.

EPCOR spokesman Barbra Korol said that by the end of 2001, more than 70% of EPCOR's revenues will be generated outside of Edmonton, mainly due to the purchase of the retail operations of Utilicorp.

"It's almost like it's a flip," she said, noting that EPCOR got 78% of its revenue inside city limits as of the end of last year, before it absorbed 350,000 Utilicorp customers.

Income from generation of electricity, at $24.5 million in the second quarter, is up from $15.1 million in the same period of 2000.

But EPCOR warned yesterday that will be reduced later this year due to maintenance shutdowns in power units.

Korol said EPCOR doesn't send press releases about quarterly results to the press.

When asked why, she said the company has never done so and the policy hasn't changed, noting that the releases and other financial information are posted on EPCOR's Web site.

In June, City of Calgary-owned Enmax Corp. announced a 3,100% increase in profits - a record $87.4 million during the first three months of this year, compared with $2.7 million in the same quarter last year.

Company officials said deregulation was at the root of the mammoth surge in earnings as it sold 25% more power at much higher prices to more customers.

Enmax also sold power to the starved U.S. Northwest, commanding overheated market prices and adding $33 million in revenues to company coffers.