First quarter 2012 winter temperatures were among the warmest on record with heating degree days approximately 30% fewer than those experienced in the year-ago quarter. As a result, kilowatt hour sales of electricity to weather-sensitive residential and commercial utility customers declined 9%. Natural gas sales were also negatively impacted by the much warmer weather with first quarter 2012 volumes down 21% compared to the first quarter of 2011. In total, we estimate that warmer temperatures reduced first quarter 2012 earnings by $0.13 per share compared to the first quarter of 2011, and by $0.10 per share compared to normal.
On a positive note, kilowatt hour sales to industrial customers rose 5% compared to the first quarter of 2011, a sign of economic improvement in our region. A second key driver of lower first quarter 2012 core earnings compared to the year-ago quarter was reduced margins in the merchant generation segment. The decreased margins reflected reduced generation to the merchant segment due to lower market prices for electricity.
The effects of the warm weather and lower merchant margins were partially offset by increased electric utility rates in Missouri, increased natural gas delivery rates in Illinois, and lower non-fuel operations and maintenance expenses, including reduced storm-related costs.
Turning now to Page 4, today we are affirming our core earnings guidance range of $2.20 to $2.50 per share for this year. The much warmer than normal weather led us to reduce core guidance for our regulated utility business by $0.05 per share at both the high and low ends of the range to $2.15 to $2.35 per share. This reduction in earnings guidance for the utilities is offset by an increase in the core guidance range for our merchant generation business segment of $0.05 per share at both the high and low ends of the range to $0.05 to $0.15 per share. The increase in merchant generation guidance primarily reflects lower expected depreciation expense due to the write-down of the Duck Creek energy center.Read the rest of this transcript for free on seekingalpha.com
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