Edison Earnings Drop 43% in Quarter

Edison International, the Rosemead-based owner of Southern California Edison, said Friday that third-quarter profit dropped 43% from a year earlier, when the company had investment gains.

But Edison, which owns a subsidiary that operates coal-fired power plants in Illinois and Pennsylvania, said it posted improved operating profit because of higher wholesale energy prices, higher trading income and lower net interest expense during the quarter.

Net income fell to $462 million, or $1.39 a share, from $813 million, or $2.46, Edison said. Profit a year earlier was boosted by the sale of the company’s stake in New Zealand’s Contact Energy, as part of Edison’s strategy to focus on its Southern California utility and its Illinois and Pennsylvania power plants.

Earnings from continuing operations rose to $435 million, or $1.31 a share, from $314 million, or 95 cents. Earnings excluding discontinued operations rose to $1.24 a share from 87 cents. Analysts surveyed by Thomson Financial had forecast, on average, earnings of $1.10 a share.

Revenue rose 19% to $3.78 billion.

Edison also boosted its forecast for 2005 per-share earnings, excluding certain items, to a range of $2.80 to $2.90, up from $2.53 to $2.63. The increase is because of higher power prices and lower interest costs at Mission Energy, the unit that owns the Illinois and Pennsylvania plants. It was the second time this year that Edison raised its forecast. The company started the year targeting profit of $2.14 a share.

“The key here is the performance of our merchant coal-fired power fleet,” Chief Executive John Bryson said in a conference call with analysts. In the third quarter, the average power price rose 63% in Illinois and 26% in Pennsylvania.

Profit excluding certain items at Mission Energy rose to $188 million from $82 million, while earnings at Southern California Edison climbed to $219 million from $209 million.

Southern California Edison is waiting for a regulatory decision on its application to raise rates by about $341 million. The California Public Utilities Commission staff is expected to issue a recommendation soon, followed by a final decision early next year, Bryson said.

The additional funds are needed to upgrade the utility’s electricity system, Bryson said.

“We have modernized meaningfully, but we still have a ways to go,” he said.

Edison is expanding into wind energy and looking for opportunities to acquire or construct additional power plants, Bryson said.

“We’ve looked around a little bit,” Bryson said. “High prices are being paid in the market by others, and we’re not going to do that.”

Edison shares fell 2 cents to $43.08. The company is the second-best performer this year on the Philadelphia Stock Exchange’s utility index.