CH Energy Group Inc. (CHG) filed Quarterly Report for the period ended 2009-06-30.
CENTRAL HUDSON GAS & ELECTRIC generates purchases and distributes electricity and purchases and distributes gas. The Company in the opinion of its general counsel has with minor exceptions valid franchises unlimited in duration to serve a territory extending about 85 miles along the Hudson River and about 25 to 40 miles east and west from such River. The southern end of the territory is about 25 miles north of New York City and the northern end is about 10 miles south of the City of Albany. CH Energy Group Inc. has a market cap of $785.5 million; its shares were traded at around $49.76 with a P/E ratio of 22 and P/S ratio of 0.6. The dividend yield of CH Energy Group Inc. stocks is 4.3%. CH Energy Group Inc. had an annual average earning growth of 1.3% over the past 5 years.
Highlight of Business Operations:
A breakdown by business unit of CH Energy Group s operating revenues of $200.2 million and $313.7 million for the three months ended June 30, 2009 and 2008, respectively, is illustrated below.
A breakdown by business unit of CH Energy Group s net (loss)/income of $(1.5) million and $1.7 million for the three months ended June 30, 2009 and 2008, respectively, is illustrated below. The results for the three-month periods reflect the seasonality of Central Hudson s natural gas business and Griffith s fuel oil distribution business.
A breakdown by business unit of CH Energy Group s net income of $21.7 million and $21.0 million for the six months ended June 30, 2009 and 2008, respectively, is illustrated below.
Central Hudson filed a rate increase request with the PSC in July 2008. A final, amended, Order was issued by the PSC on June 26, 2009, for rates beginning July 1, 2009. The Order includes a $39.6 million and $13.8 million increase in electric and gas delivery rates, respectively (of which $20 million is non-cash), a 10.0% allowed return on equity (“ROE”) and a common equity layer of 47%. Additionally, the Order approved electric and gas Revenue Decoupling Mechanisms (“RDM”) which should serve to prevent the significant revenue shortfall such as that which occurred during the last three years. Although the PSC recognized Central Hudson s efforts and performance in terms of high quality of service, productivity improvements and strong cost management, the PSC s Order included less than full recovery for certain elements of cost, which could result in Central Hudson earning less than the 10.0% authorized ROE. First, the PSC disallowed portions of Central Hudson s labor expense and insurance costs. Second, the approved rates reflected a $3 million “austerity” adjustment that the PSC stated was necessary to reduce the impact on customers bills in light of the weakness in the financial markets and rising unemployment. As discussed in more detail under PSC Proceedings, Central Hudson has filed a Petition for Rehearing on certain of the disallowed costs. Although the outcome of this petition cannot be predicted, it is not expected to have a material impact on Central Hudson s earnings or cash flows. Central Hudson s Management will seek to control its costs in a manner that will minimize the impact that the cost disallowances and austerity adjustment have imposed on Central Hudson s ability to earn its 10.0% authorized ROE.
Losses for CH Energy Group totaled $0.09 per share in the second quarter of 2009, versus earnings of $0.11 per share in the same period of 2008. Year-to-date earnings were $1.37 per share, as compared to $1.33 per share during the first half of 2008.
Year-to-date earnings per share for these units totaled $0.03 per share compared to $0.15 per share posted for the first six months of 2008. Year-to-date earnings were also impacted $0.05 by a reserve recorded in the first quarter of 2009 related to a development project of CHEC. The reserve represents the full amount of the note receivable investment for development expenditures and this project represents CHEC s only current early-stage development project. Additionally, outages at the Lyonsdale facility lowered earnings by $0.04 year-to-date.
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