ST. JOHN'S, NEWFOUNDLAND--(CCNMatthews - April 26, 2006) - Newfoundland Power Inc. (TSX:FTS) today released its 2006 first quarter results announcing decreased earnings, lower operating costs and a strong customer satisfaction rating.
Earnings for the first quarter of 2006 were $10.7 million compared to $13.0 million for the same quarter in 2005. Effective January 1, 2006, the Company changed its revenue recognition policy from a billed basis to an accrual basis, as approved by the Newfoundland and Labrador Board of Commissioners of Public Utilities (the "PUB"). The change reduces revenue for the quarter, provides a better matching of revenue to purchased power cost and makes Newfoundland Power's revenue recognition policy consistent with other Canadian electric utilities. The comparability of 2006 quarterly earnings is affected by the change. Had revenue continued to be recognized on a billed basis in 2006, earnings for the first quarter would have been $12.7 million compared to earnings of $13.0 million in the same quarter last year. Annual earnings for 2006 are not expected to be materially different from 2005 as a result of the change in revenue recognition policy.
Lower operating expenses, lower purchased power cost and adjustments approved by the PUB as a result of the Company's 2006 Accounting Policy Application had a positive impact on first quarter earnings. These positive impacts were partially offset by higher amortization, finance charges, pension and early retirement program costs for the quarter compared to last year.
"We continue to manage our operating costs in an effort to keep electricity rates as low as possible for customers, while focusing on assisting customers on how to better manage their own electricity usage," said Karl Smith, President and Chief Executive Officer, Newfoundland Power Inc. During the first quarter of 2006, the Company took part in several energy efficiency seminars, including the provincial government's Residential Energy Efficiency Program. Throughout February and March, the Company participated in EnergySmart seminars delivered by Sustainable Housing and Education Consultants to homeowners and contractors across Newfoundland and Labrador. The Company also continues to provide energy efficiency information to customers through electricity bill inserts, its Website, advertising, trade shows, seminars and energy management programs.
The Company continues to maintain a strong customer satisfaction rating, achieving 89% in the first quarter of 2006. "Such a strong customer satisfaction rating demonstrates that our efforts to provide customer service excellence through every interaction with customers are being appreciated," added Smith. "Our employees remain committed to delivering innovative solutions to meet the ever-changing needs of our customers."
During the first quarter, the Company invested approximately $11.6 million in capital projects across the island. "Our 2006 Capital Budget of approximately $50 million focuses on continuing to upgrade and strengthen our electricity system to ensure we have the capability to deliver safe, reliable service to our customers," added Smith.
This year's capital projects include replacing aged equipment to strengthen the electricity system and responding to new service requirements to meet customer growth.
The Company continues to be committed to youth and the development of excellence through sports. "We were proud to be a platinum sponsor of the 2006 Newfoundland and Labrador Winter Games which took place in Humber Valley during the first quarter," concluded Smith.
With a customer base of over 227,000 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, please visit www.newfoundlandpower.com.
All the common shares of Newfoundland Power are owned by Fortis Inc., a diversified, international electric utility holding company with assets exceeding $4.3 billion and annual revenues of more than $1.4 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.
Newfoundland Power may include forward-looking statements in this release. By their very nature, forward-looking statements are based on underlying assumptions and are subject to inherent risks and uncertainties surrounding future expectations generally. Such events include, but are not limited to, general economic, market and business conditions, regulatory developments, weather and competition. Newfoundland Power cautions readers that should certain events or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected.
FOR FURTHER INFORMATION PLEASE CONTACT:
Newfoundland Power Inc.
Director, Corporate Communications
(709) 737-2821 / Cellular: (709) 682-1470