Xcel Energy Inc., owner of utilities operating in Denver and Minneapolis, said third-quarter profit increased 15 percent after it raised rates for electricity and natural gas.
Net income rose to $224.5 million, or 53 cents a share, from $196 million, or 47 cents, in the third quarter a year ago, the Minneapolis-based company said today in a statement. Sales gained to $2.41 billion from $2.29 billion.
Xcel Energy is benefiting from higher prices at its utilities, including Northern States Power, which raised electricity rates in Minnesota in January. Xcel Energy said earlier this week that it reached a compromise with consumer advocates in Colorado that would result in a $107 million increase in base electricity rates starting Jan. 1.
“Rate cases drove profits higher and customer growth was very robust,” said Nathan Judge, an analyst for Atlantic Equities in London, who rates Xcel Energy shares “neutral” and doesn’t own them. “Lastly, they benefited from investments they’re making in new power plants.” Those factors helped Xcel Energy beat his per-share profit estimate by 5 cents, Judge said. His estimate matched the average of seven analysts surveyed by Thomson Financial.
During the quarter, Xcel Energy, which owns utilities that operate in eight states, also benefited from higher rates for gas in Colorado and electricity in Wisconsin. The company is seeking regulatory approval for a $48 million rate increase in Texas. The compromise on electricity rates in Colorado also requires approval from state regulators.
Higher margins for electricity accounted for 8 cents a share in increased earnings in the third quarter, while gains in gas- related profit contributed 2 cents, the company said.
Shares of Xcel Energy rose 5 cents to $22 at 10.23 a.m. in composite trading on the New York Stock Exchange. The shares have risen 19 percent this year and are heading for their biggest annual gain since 2003.
Xcel Energy also said it expects 2007 profit from continuing operations in a range of $1.35 a share to $1.45 a share.
The forecast was “a little less than I thought it would be,” said Charles Fishman, an analyst with A.G. Edwards in St. Louis, who rates the shares “hold” and doesn’t own them. “Probably they are just being conservative.” Fishman estimates Xcel Energy will earn $1.44 a share next year.
For annual earnings from continuing operations this year, Xcel Energy said results will be in the upper half of its target range of $1.25 a share to $1.35 a share.
