Previous Statements by NVE
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Safe Harbor, I think I don’t need to review this. I’m sure you all have. I’m going to be, if I remember correctly make sure that everybody who is on the webcast knows who I am and the slides, because I think the slides are on the webcast too. Correct, Max?Max Kuniansky Correct. Michael W. Yackira Thank you. This is an overview on page four of the company. We have a $4 billion market cap. Right now, we serve about $2.5 million Nevadans throughout about 90% of the state, 93% of the load in the state is served by NV Energy, and we have about 40 million tourists who are coming to our state that will be likely high this year, an all-time high, the high before was slightly under 40 million in 2007, but the expectation is that it’s going to be above that this year. Large service territory, about 45,000 square miles, you can see from the map that we do cover most of the populous areas of the state, Las Vegas, and Clark County are the most populous areas and the most compact, that’s about 4500 square miles with a 45,000 that we serve. So the rest of the state is quite remote, the other major concentration is Reno-Sparks area right on the western corner of the state that you can see, a statistic that’s not particularly important, but one that somebody reminds me of most of the time that Reno is actually west of Los Angeles, which sounds counterintuitive, but it really is. Large transmission grid resulting from the time when we were importing power significantly in, as you know that’s changed a lot over the past several years, generating capacity of over 6000 megawatts, and we can meet that generating capacity statewide to the tune of about 85%, again quite significantly different from where we were just about five or six years ago. Peak demand last year was a little over 7000 megawatts, so we’re expecting to be a little bit higher than that this year, but of course that's all depended upon summer weather.
Slide five, we call these three timeframes that we’ve experienced since the merger, NV 1.0, 2.0 and 3.0. We try to come up with something a little clever really than that, but we keep think this is as bad as – as good as we could explain it. Sierra Pacific Resources and Nevada Power merged in 1999, and soon afterwards we experienced the throws of the western energy crisis. We all remember back to those days, we were very short on power. We were dependent upon the markets to produce energy for us.Now it’s fine, during a period of time when there was sufficient capacity, when the markets were not fairly stable, when there was a lot of hydro in the northwest, and then with the recreation of the California markets and the so called perfect storm of very, very drought ridden northwest, as well as some unscrupulous players in the California market driving up the price. We were detailed being wagged by the California dog, and we suffered through a couple of years of traumatic financial decline, when our regulator found our purchases of natural gas and power to be imprudent, and we lost well over $0.5 billion of our equity. We lost our credit rating, we stopped our dividend, a lot happened in 2002 and 2003. But we started on a new strategy in 2003, which was completed just last year to grow our generation base so that we wouldn’t be cut short, and wouldn’t be beholding on markets, and that’s proved to be beneficial for both customers and investors. I’ll talk about that in a few minutes. But we’re recalling 2.0 for NV Energy now is, transitioning from a period of time when we were adding to rate base, a very lumpy earnings, we’re counting on our regulator to be fair, and they’ve been very fair in the treatment of our rate filing. And now we’re in a position where we have positive cash flow, and last week announced what part of the deployment of that cash flow will be both in dividend increase as well as debt reduction. And having the opportunity to be very prudent and patient in deploying capital for making investments, but I’ll talk about that again in a little bit it’s just an overview now.
Let me talk about near-term; near-term drivers on page six are fairly straight forward, we have less need to go into our regulators to ask for major rate increases, that’s certainly good for our customers, it puts less risk on our company. And we have a stable earnings pattern that we can foresee, improving ROE meaning improving our ability to earn our allowed ROE related to the position that we’ve been in having these lumpy years of major rate cases, and have free cash flow.Page 7, this shows the lumpiness of the earnings, they were clearly driven by the rate cases that we filed, you can see on that chart, on the bottom left hand side of the chart that we had two major rate changes in a period of about 2.5 years, one was the completion of several power plants that we brought into rates in the middle of 2009, and the one that we just start at the beginning of this year was mainly the inclusion of the remainder of the Harry Allen Generating plant that was not in rates. That was completed just last year. Read the rest of this transcript for free on seekingalpha.com