Green Mountain Power Reports Earnings for 2002
Green Mountain Power Corporation (NYSE:GMP) today announced consolidated earnings of $1.98 per share of common stock, diluted, in 2002 compared to consolidated earnings of $1.85 per share, diluted, in 2001. Reduced power supply expenses, declines in other operating expenses and lower interest and preferred stock dividend costs more than offset reduced operating revenues in 2002, compared to 2001.
"Year-end financial results for 2002 were strong," said Christopher L. Dutton, President and Chief Executive Officer, “and we anticipate similar earnings for 2003. We are particularly pleased to have an opportunity to achieve these results without the need for an increase in rates for our customers."
Total operating revenues for 2002 declined by $8.9 million due to decreased wholesale sales of $13.2 million and a reduction in other operating revenues of $1.7 million, offset in part by increased retail operating revenues. Retail operating revenues increased by $6 million, or 3.0 percent, for 2002 as compared to 2001, reflecting recognition of $4.4 million of deferred revenue from rate leveling discussed below and increased sales to higher-margin residential and commercial customers that more than offset a decline in sales to IBM.
The Vermont Public Service Board's January 2001 rate order (the last time the Company’s rates increased) allowed the Company to use additional revenues of approximately $8.5 million, generated by leveling winter/summer rates during 2001, to help offset costs and realize its allowed rate of return during the 2001-2003 period. In 2002, the Company recognized approximately $4.4 million of these additional revenues. The Company expects to recognize in 2003 all of its remaining $4.1 million in deferred revenues collected in 2001.
Power supply costs were $7.6 million lower in 2002, compared to 2001, reflecting a decrease in wholesale sales and decreased costs under a power supply arrangement with Hydro-Quebec, which were offset in part by increased costs under the Company’s arrangement with Morgan Stanley that hedges exposure to increases in the price of fossil fuels, and increased costs of power from the Vermont Yankee nuclear plant.
Other operating expenses decreased by $1.7 million in 2002, compared to 2001, primarily due to reductions in administrative and general costs. These savings were offset by increased maintenance expense of $1.7 million in 2002, compared to 2001, caused by higher costs of maintaining rights of way and increased storm-related costs.
During the fourth quarter of 2002, the Company successfully completed a Dutch Auction self tender offer for approximately 812,000 shares (approximately 14 percent of its common shares outstanding) and a $42 million debt issuance used to finance the equity repurchase and repay substantially all of the Company’s short-term debt. “The completion of our capital restructuring program has helped reduce our cost of capital and is instrumental to our expectations that we can avoid increasing costs to our customers during 2003,” said Mr. Dutton. Earnings for 2002 benefited from a $0.9 million decline in interest expense and a reduction in preferred dividends of $0.8 million compared to 2001, due to the redemption of nearly all outstanding preferred equity as part of the Company’s capital restructuring efforts.
“We are extremely pleased with the performance of the Company’s stock during 2002,” added Mr. Dutton. “We have positioned ourselves principally as a distribution company with a strong focus on using technology to improve customer satisfaction. We have room to grow our dividend over time, while at the same time protecting customers and investors by limiting risk, and focusing management efforts on our core electric business.”