By William Opalka
Avangrid, the result of the U.S. arm of Spanish conglomerate Iberdrola acquiring UIL Holdings, released its first-ever earnings results Monday, showing net income of $267 million for 2015.
The company, which was created on Dec. 17 when regulators approved the $3 billion acquisition, said that with only two weeks of UIL units included, there was no meaningful comparison to the prior year’s results. (See Divided PURA Approves Utility Takeover.)
But Avangrid said the combined net income of Iberdrola USA and UIL for the full year — excluding $71 million in merger costs and UIL’s $130 million in earnings prior to the acquisition — was $468 million, compared with $538 million in 2014. Iberdrola’s wind assets reported lower income due to the effects of El Nino and warm winter weather impacted electricity sales.
The company had not posted a full earnings report showing operating revenue, expenses and fourth-quarter results as of press time.
“In 2015, we successfully completed our merger transaction on target, obtaining all regulatory approvals and closing within 10 months of our announcement,” CEO James P. Torgerson said in a statement. “In 2016, we will rapidly conclude our transition planning within the first quarter, focus on executing our capital expenditure plan in all of the businesses and proceed with our important initiatives.”
Avangrid includes eight gas and electric distribution utilities in New York and New England, and renewable energy operations in 25 states coast-to-coast, primarily wind farms. The company is the second-largest operator of wind facilities in the U.S.
In a presentation to Wall Street analysts on Monday, Torgerson said, “We are now a large energy company with regulated businesses and investments in clean energy. Ninety percent of our generation is totally emissions-free, so we can focus very much on the renewable business.” The CEO said about two-thirds of its assets are in fixed, long-term power purchase agreements that create predictable earnings.
Avangrid projects earnings of $1.65/share for its distribution business, 40 cents/share for its renewables business and a 5-cent loss from corporate operations and its gas storage and transportation business.
For comparison going forward, the company is using the combined operations of Iberdrola USA and UIL from 2014 as the base in projecting future earnings of 8 to 10% per year. It gave an estimate of consolidated earnings of $2/share for 2016. The company’s board of directors declared a quarterly dividend of $0.432/share on its common stock.
New York Rate Case
Company officials announced that a settlement had been reached in New York for its two electric and gas distribution utilities, New York State Electric and Gas and Rochester Gas & Electric.
A joint proposal with numerous stakeholders — including regulatory staff, large commercial and industrial customers, and consumer and environmental representatives — was filed with the New York Public Service Commission on Friday (15-E-0283).
Depending on the year and segment of the three-year proposed settlement, the increases range from 1 to 7%. In aggregate, the total in incremental revenue is $390 million. Also included in the settlement is the recovery of $262 million over about seven years for storm-related costs in the NYSEG territory, primarily related to Superstorm Sandy.
The company expects public hearings to begin in April, PSC consideration in May and rates effective on June 1.