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NV's Management Discusses Q4 2011 Earnings Results - Earnings Call Transcript

Timing of outages at several of our power plants reduced EPS by $0.03 in the quarter. These were primarily planned maintenance outages. Finally regulatory adjustments and reserves reduced earnings per share by approximately $0.05. These adjustments were primarily related to the decision on the Southern Utility Rate case.

As a result of the PUCN’s order, earnings were reduced by approximately $16 million pre-tax or about $0.04 of EPS impact primarily related to the Clark peaking units, the Ely Energy Center and AFUDC for Harry Allen. The remaining $0.01 consisted of reserves recorded for potential future liability. In summary, our fourth quarter results were driven by Harry Allen, timing of plant outages and regulatory adjustments.

Turning now to earnings for the full year 2011 we knew going into ’11 that we would be challenged by regulatory lag and indeed that was the case. As I just mentioned, we reported full year earnings of $0.69 down $0.27 as compared to the prior year. Margin was down about $0.04 year-over-year, driven primarily by the sale of the California assets.

Excluding California, megawatt hour sales were essentially flat compared to the prior year. Customer growth of just under 1% was offset by slightly milder weather in comparison to the prior year and the effect of conservation programs. Below the gross margin line Harry Allen regulatory lag reduced EPS by about $0.12 year-over-year.

O&M expense excluding the impact of Harry Allen was an improvement of $0.02 compared to the prior year. Our goal was to hold O&M flat year-over-year and I’m pleased to report that we did achieve that goal. The full year impact of regulatory adjustments and reserves was $0.07 negative. This consists of the approximately $0.05 primarily rate case adjustments that we recorded in the fourth quarter that I just mentioned plus the $0.02 for the reversal of loss revenue that was recorded in 2010. As you will recall, that Commission Order that we received in ’11 resulted in this adjustment.

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