|
There has been good news and, well, vaguely unsettling news about NRG Energy in recent days.
The good news is that the wholesale power generating company, fresh out of bankruptcy in December, had a strong first quarter. High natural gas prices, which led to high electricity prices, drove up the profit margin on NRG's electricity output, most of which comes from coal-fired power plants.
The company made a $30 million profit during the quarter. It had $225 million in positive cash flow, not counting $125 million in cash flow from a one-time settlement.
NRG's power plants that burn coal - including the Huntley and Dunkirk stations near Buffalo, purchased in 1999 from Niagara Mohawk - accounted for 72 percent of the company's output, but only 44 percent of its costs.
"We obviously have had some exceptionally strong first-quarter financial results," said David Crane, president and chief executive officer, during a conference call Tuesday with financial analysts.
The unsettlingnews? NRG's independent accountant, Pri Poor's, said NRG's liquidity is adequate and its operating record is stable. On average, the company's power plants have been available 90 percent of the time during the past three years, Spangler reported.
Standard & Poor's gives NRG a corporate credit rating of B+.
On the downside,Spangler noted that deregulated power markets are generally depressed and may continue to be. The sector as a whole is subject to scarcity of capital and regulatory uncertainty, she wrote.
NRG has 55 generating plants, the greatest concentration of which are in the Northeast. The company plans to invest in extending the lives of its most profitable plants, many of which are aging coal plants, and may even look to acquire plants again, selectively.
"There is a night-and-day difference between buying assets at the top of the commodity price cycle, as the old NRG did, and, on the other hand, seeking to buy assets at the bottom of the commodity price cycle that we're currently in," Crane said.
|
