Electric Utilities Need More Bad Weather (LNT, DUK)

Too cool in summer, too warm in winter add up to lower profits for electric utilities. That’s the story today from both Alliant Energy Corp. (NYSE:LNT) and Duke Energy Corp. (NYSE:DUK).

Alliant reported full-year EPS of $2.61, down from EPS of $3.78 in 2007, but $0.02 better than analysts’ estimates. Full-year revenue of $3.68 billion also beat estimates of $3.59 billion. The fourth quarter was less upbeat, though, with EPS from continuing operations of $0.46, down from $1.80 in the same period a year ago.

Alliant’s EPS guidance for 2009 is $2.18-$2.48. Normal weatherconditions–not too hot, not too cold–will drive results, as will theoverall economy.

Duke reported non-GAAP EPS of $0.27, higher than analysts’estimates of $0.25. For the full year, Duke reported non-GAAPEPS of $1.21, a penny better than expected, but two pennies worse than2007. Revenue for the quarter met expectations of $3.13 billion. For the full year, Duke reported $13.21 billion in revenue, beatingestimates of $13.15 billion. Once again, weather takes the blame forthe drop in annual EPS.

Duke noted that in 2009 it will freeze salaries for most of its exemptemployees, and is setting an "employee incentive target’ of $1.20EPS for the year. That’s not very encouraging.

Paul Ausick
February 5, 2009