PPL improved its third-quarter performance by 20%, reporting $473 million($0.69/share) in earnings, compared to $393 million ($0.58/share) for the same period last year. The company attributed the increase to higher rates for its Pennsylvania and U.K. operations and warm weather, which boosted demand.

PPL raised the bottom end of its 2016 earnings guidance by 5 cents to $2.30-$2.45/share based on slightly stronger-than-expected performance at its Pennsylvania and Kentucky utilities. The company, whose Pennsylvania utility benefited from a rate increase in January, intends to file rate hike requests in November for Kentucky Utilities and Louisville Gas and Electric.

With the exchange rate for the British pound falling in the wake of the U.K.’s decision to leave the European Union, PPL mitigated the financial impact on its U.K. operations by restriking its currency hedges.

“We remain confident in our ability to deliver on our long-term growth projections,” PPL CEO Bill Spence said during a conference call. “We expect to achieve 5% to 6% compound annual earnings growth from 2017 to 2020 and are targeting annual dividend growth of about 4% over the same period.”

Lagging Coal Units Drag down PSEG

Public Service Enterprise Group’s third-quarter earnings of $327 million ($0.64/share) were down 26% compared to the same period last year, when it reported $439 million ($0.87/share) in 2015. However, the company’s adjusted operating earnings of $444 million ($0.88/share) were up 10% year-over-year from $403 million ($0.80/share) in 2015.

The retirement of two coal-fired plants in New Jersey, a reduction in the value of its lease of two coal-fired plants in Illinois and lower hedges accounted for the difference, the company said.

“Net income was impacted by our decision to retire the Hudson and Mercer coal-fired generating stations in 2017,” said PSEG CEO Ralph Izzo.

Warm summer weather staved off an even greater drop in the company’s performance, but it wasn’t enough to offset poor performance year-to-date thanks to unfavorably warm conditions during the winter. Izzo announced the company was shaving the top end of its 2016 guidance by 5 cents to $2.80-$2.95/share.

Its Public Service Electric and Gas subsidiary has reached a settlement with key parties for an extension of its existing landfill/brownfield solar program. The settlement provides for an investment of approximately $80 million to construct 33 MW of grid-connected solar generation over three years.

The PSEG Power generation subsidiary incurred $67 million ($0.13/share) in one-time charges related to the early retirement of the Hudson and Mercer generators.

Reduced energy hedges caused by lower fuel prices were partially offset by lower load-serving costs, but they still reduced net income by $0.02/share, the company reported.

The PSEG Enterprise/Other business group reported a net loss of $67 million ($0.13/share) after recalculating the residual values of its leases of two coal-fired plants in Illinois. The company recorded an after-tax impairment of $86 million on the leases “as a result of current and expected future market conditions.”

Unit Retirements, Tax Ruling Dampen Exelon’s Performance

Exelon’s third-quarter earnings fell 22% to $490 million ($0.53/share), down from $629 million ($0.69/share) in 2015. Adjusted earnings were up 11% year-over-year to $841 million ($0.91/share) from $757 million ($0.83/share).

While the company benefited from substantially better hedging and reduced nuclear decommissioning trust fund payments, those positives were outweighed by an unfavorable tax ruling, costs from the Pepco Holdings Inc. merger and plant retirements.

In September, the U.S. Tax Court ruled against the company in a $1.45 billion tax-shielding dispute with the Internal Revenue Service that stemmed from Exelon’s $4.8 billion sale in 1999 of six coal-fired plants in Illinois. The buyer, Edison Mission Energy, eventually sold four of the plants out of bankruptcy to NRG Energy, which leases two of them to PSEG.

While Exelon hasn’t decided whether to appeal the ruling, it is required to post a bond for the payment anyway. The company accounted for $199 million of the bill in the third quarter.

The quarter saw a shuffling of Exelon’s nuclear fleet as well, with the company announcing the early retirement of the Clinton and Quad Cities facilities and the purchase — pending regulatory approval — of Entergy’s James A. FitzPatrick station in New York.

Overall, earnings were bolstered by regulatory rate increases and favorable weather but partially offset by decreased capacity revenue, increased income taxes from a decrease in the domestic production activities deduction and increased nuclear decommissioning amortization, the company said.

Even with the write-downs, CEO Christopher Crane was bullish, announcing that the company was raising its 2016 guidance from $2.55/share to $2.75/share. The revision was based on improved performance of its Commonwealth Edison and recently acquired PHI utility subsidiaries.

Dominion Improves Finances

Dominion Resources had a good Monday last week, announcing both strong third-quarter results and the redistribution of its Questar acquisition that allowed the parent company to retire debt.

The company earned $690 million ($1.10/share) for the third quarter, compared with $593 million ($1/share) for the same period in 2015. It amounted to a 16% increase that the company partially attributed to favorable weather, lower capacity expenses, revenues from regulated growth projects and a lower tax rate. The performance was offset by share dilution and the absence of a farmout transaction, the assignment of part or all of a natural gas interest to a third party, which contributed $27 million to earnings a year earlier, the company said.

Dominion reported an operating earnings increase of 17% to $716 million ($1.14/share), compared to $611 million ($1.03/share) last year. The principal difference in the adjusted earnings was related to transaction costs associated with its acquisition in February of the pipeline company Questar.

The deal expanded Dominion’s service territory to Utah, where the natural gas deliverer has about 1 million customers. The sale closed in September, and by the end of October, Dominion had “dropped down” Questar to Dominion Midstream Partners, its master limited partnership, in a $1.7 billion deal that will allow the company to retire debt.

– Rory D. Sweeney