WRAPUP 1-U.S. utility earnings point to recovering economy

Thu Oct 28, 2010 9:57am EDT

* Duke, Xcel, CenterPoint, El Paso Electric Q3 beats

* Duke, Portland General raise FY earnings outlook

* CenterPoint, Xcel back FY profit view

* Industrial demand picks up in Southeast

By Krishna N Das and Adveith Nair

BANGALORE, Oct 28 (Reuters) - In a strong indication that the U.S. economy is gradually finding its feet, and boosted by a hotter-than-normal summer, power utilities Duke Energy (DUK.N) and Xcel Energy (XEL.N) posted their best profits in at least 20 quarters, and were upbeat about the rest of the year.

Near-record temperatures across much of the United States fuelled higher electricity usage this summer than last, according to the nation's electricity grid operators -- also a potential wake-up call to utilities that delayed plans to add new nuclear and coal-fired plants during the recession.

The power utility sector sub-index .GSPELEC is up around 15 percent since late-May, just outpacing the broader Dow Jones industrial average .DJI.

Charlotte, North Carolina-based Duke posted a six-fold rise in third-quarter profit, hiked its full-year profit view for a second time, and gave the economy a thumbs-up. [ID:nN28277258]

"While the weather was a predominant factor for the quarter, we also saw signs of continued improvement in the economy as evidenced by our increased industrial sales volumes," Duke CEO James Rogers said in a statement.

The latest third quarter was the hottest in the Carolinas since at least 1961, Duke said, adding that temperatures were also significantly above normal in the Midwest.

Duke distributes electricity to more than 3.9 million customers in the Carolinas, Kentucky, Indiana and Ohio.

"Favorable weather, relative both to normal and year-ago figures, improved industrial sales, rate relief and flat operating costs more than offset higher capital costs and share dilution," wrote UBS analysts, who rate Duke stock as "neutral".

"We continue to believe that its challenge is delivering any material earnings per share growth on a weather-normalized basis."

Xcel Energy Inc (XEL.N), valued at $11 billion, reported adjusted earnings of 62 cents a share, easily beating market estimates. It said profit for the full year would come at the upper half of its forecast. [ID:nASA00WXI]

"Temperatures for the third quarter were warmer than normal, while temperatures in the third quarter of 2009 were cooler than normal," Xcel said in a statement.

PPL Corp (PPL.N) reported estimate-topping profits and narrowed its full-year earnings outlook. [ID:nASA00WYQ] while Portland General Electric Co (POR.N) and El Paso Electric Co (EE.N) both posted big gains -- not only beating estimates but also raising their full-year profit view. [ID:nASA00WVE] [ID:nWNAB7660]

CenterPoint Energy's (CNP.N) third-quarter earnings beat estimates, too, and the Houston-based company backed its 2010 outlook. [ID:nASA00WYH], while quarterly profit at CMS Energy (CMS.N) nearly doubled and the utility backed its adjusted earnings outlook for the year. [ID:nASA00X03]

Southern Co (SO.N), FirstEnergy (FE.N), Wisconsin Energy (WEC.N), Public Service Enterprise Group (PEG.N), SCANA Corp (SCG.N) and Allegheny Energy AYE.N had earlier posted healthy quarterly results. [ID:nSGE69Q0GH] [ID:nSGE69O0J8] (Reporting by Krishna N Das and Adveith Nair in Bangalore, Editing by Ian Geoghegan)

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