ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(CCNMatthews - July 28, 2005) - Newfoundland Power Inc. (TSX:FTS) today released its 2005 second quarter results.
"Newfoundland Power continues to deliver quality customer service," said Karl Smith, President and Chief Executive Officer, Newfoundland Power Inc. "In the second quarter, we received a customer satisfaction rating of 90%. We are committed to giving our very best to ensure that our customers receive the service they deserve every day. This has enabled us to meet customers' expectations and maintain such a high rating."
Earnings for the second quarter were $11.5 million, compared to $10.9 million for the same quarter last year. Earnings were impacted by the successful settlement of a longstanding income tax issue with the Canada Revenue Agency and the application of a revised purchased power rate structure which impacts the seasonality of reported interim results. Had the interest income related to the tax settlement been excluded and the prior purchased power rate structure been utilized in the current quarter, earnings applicable to common shares would have been $10.4 million compared to $10.9 million in the same quarter of 2004.
A 0.5% decrease in customer electricity rates effective January 1, 2005, increased costs related to an early retirement program, higher pension costs and increased amortization resulting from growth in the Company's capital assets contributed to the reduction in earnings in the second quarter. These decreases were partially offset by higher electricity sales and increased revenue from pole rentals.
On July 1, 2005, there was an average increase in electricity rates of approximately 5.2% as a result of the annual operation of the Rate Stabilization Account (RSA). This increase was primarily due to the high projected price of oil required by Newfoundland and Labrador Hydro (Hydro) to generate electricity at its Holyrood generating facility. Variations in the price and amount of oil used by Hydro in generating electricity are incorporated in customers' electricity rates through the operation of the RSA. Newfoundland Power will not derive any financial benefit from this rate increase.
"We recognize that this is a significant increase for our customers and we remain committed to working with customers to help them minimize the impact of this increase," says Smith. Offering customers the right energy efficient tools, programs and services to help them manage their electricity consumption through the wise use of electricity is a key focus for the Company. To assist our customers in preparing for the next heating season, the Company has enhanced its Wrap Up for Savings program, which provides rebates and financing for insulation upgrades in electrically-heated homes. From July 1 to September 30, 2005, the Company will provide double rebates on basement insulating products.
The Company has committed, through its 2006 Capital Budget application with the Newfoundland and Labrador Board of Commissioners of Public Utilities, to a capital investment next year of approximately $49 million. "Appropriate capital investments are critical to ensure the continued reliability and efficiency of the electricity system in the province," said Smith.
In the second quarter, the Company exceeded its Partners for Life pledge to Canadian Blood Services by making more than 200 blood donations in just eight months. As one of the five founding members of the Partners for Life program, the Company committed to make a minimum of 200 blood donations within a year to help save lives. Since September 2004, employees, retirees and family members have made 220 donations, making Newfoundland Power the first of the nine organizations now involved in the Partners for Life program to achieve its pledge goal.
All the common shares of Newfoundland Power are owned by Fortis Inc., a diversified, international electric utility holding company with assets of approximately $4.0 billion and annual revenues of approximately $1.2 billion. The Common Shares, Series C First Preference Shares and Series E First Preference Shares of Fortis Inc. are traded on the Toronto Stock Exchange under the symbols FTS, FTS.PR.C and FTS.PR.E, respectively. Fortis Inc. information can be accessed at www.fortisinc.com.
With a customer base of over 225,000 accounts, Newfoundland Power is dedicated to providing the highest level of customer service and reliability of electricity in the most cost-efficient manner possible. For more information on Newfoundland Power's programs, services and community partnerships, visit www.newfoundlandpower.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
Newfoundland Power Inc.
Director, Corporate Communications
(709) 737-2821 / Cell: (709) 682-1470