Sempra’s Profit Jumps 34%, Irking Consumer Advocates

This won’t cool tempers that are boiling over soaring electricity bills: The parent of San Diego Gas & Electric reported a 34% increase in second-quarter earnings Thursday.

Executives of San Diego-based Sempra Energy, which also owns Los Angeles-based Southern California Gas, emphasized that the earnings jump came not from its utilities, which managed a ho-hum performance during the quarter. But consumer advocates contend that the higher profit still came on the backs of consumers.

Second-quarter net income of $110 million, or 55 cents per diluted share, primarily reflected trading gains on oil and natural gas and the improved performance of unregulated businesses, the company reported. A year ago, Sempra earned $82 million, or 35 cents per diluted share, which included a $12-million non-recurring charge. Second-quarter revenue was unchanged at $1.5 billion.

“We continue to be concerned about the impact that high . . . electricity prices are having on SDG&E;’s customers, and we are working with all the participants in California’s deregulated energy market to arrive at short- and long-term solutions,” Sempra Chief Executive Stephen L. Baum said.

Baum even went so far as to point out in a conference call with securities analysts that most of the profit the company did earn on electricity trading came from the Eastern United States, not the West.

Still, consumer advocates were fuming. Electricity users in San Diego and south Orange County, the first to leave the safety of the rate cap imposed by electricity deregulation legislation, have seen bills double and triple this summer.

Michael Shames, executive director of San Diego-based Utility Consumers’ Action Network, said he doubts Sempra’s contention that it is not making money from California’s price volatility at a time when other energy trading companies are finding it a lucrative territory.

“If Sempra somehow wasn’t able to make money on the West and everyone else was making money, then they’ve just undermined their credibility,” Shames said. “I’m dubious because I just don’t believe that Sempra was not able to make money where everyone else was.”

Nettie Hoge, executive director of the Utility Reform Network, a San Francisco-based consumer group, noted that Sempra’s new El Dorado power plant near Las Vegas sold electricity in Nevada and California during most of the second quarter.

“They’re making some money here and I don’t really care where it comes from,” Hoge said. “The corporation has been profiting and all of the risk of deregulation has been on the customers.”

The start-up of the 480-megawatt El Dorado power plant, which is jointly owned with Houston-based Reliant Energy Inc., was largely responsible for boosting the second-quarter earnings from Sempra’s power generation division to $3 million from $1 million in the year-ago quarter. California’s big investor-owned utilities sold most of their power-generating facilities in the state as part of the 1998 restructuring of California’s electricity industry, becoming primarily power distribution companies.

SDG&E; was the first of the utilities to sell its power plants and pay off its debts under deregulation, causing regulators to remove the cap on electricity rates of the utility’s 1.2 million electricity customers last summer. Rates are still frozen for the customers of Southern California Edison and Pacific Gas & Electric.

SDG&E; earned $40 million in the second quarter, down $6 million from the same period last year. Earnings at SoCal Gas were $47 million, up $1 million.

Sempra Energy’s stock rose 42 cents to close at $18.25 a share on the New York Stock Exchange.