NorthWestern Energy reported net income of $21.7 million, or 42 cents per diluted share, for the third quarter of 2019. That compares to $28.2 million, or 56 cents per diluted share, during the same period in 2018. The company credited the $6.5 million drop to higher operating costs, mild weather and less transmission revenue.
The 23 percent drop in revenue "was mainly due to higher operating costs, lower demand to transmit energy across our system and lower electric retail volumes due to mild weather," NWE CEO and President Bob Rowe said during an Oct. 30 conference call with analysts.
While the company's gross margin for the quarter was up $2.9 million compared to the same period last year, NorthWestern CFO Brian Bird called it a "disappointing quarter" for revenue, also speaking during the earnings call.
Rowe and Bird said the utility is in settlement talks for its transmission rate case filed with FERC, and plans to continue talks and hold a second technical conference before year's end. They also said they are confident the Montana PSC will approve the company's revenue requirement in its general rate case filed in 2018.
NorthWestern hopes to start a resource procurement process before the end of the year, with a goal of having new resources commercially operational in early 2023. It submitted its latest procurement plan with the PSC in August. Currently, the company says it is short 630 MW at peak. It expects that deficit to rise to about 725 MW by 2025.
The investor-owned utility is working to secure a coal supply contract for Colstrip units 3 and 4 after its current contract expires Dec. 31. The supplier filed for bankruptcy in late 2018, and its assets were acquired by a group of lenders (CU No. 1872 ). NorthWestern is working with the supplier, Westmoreland Mining, and other Colstrip owners to secure a new coal supply, according to the utility.
Based on NorthWestern’s formula for calculating earnings, it expects earnings for 2019 of between $3.38 and $3.48 per diluted share.
Net income for Idaho Power's parent company, IDACORP, was $89.9 million, or $1.78 per diluted share, during the third quarter. That is a $12.3 million drop compared to the same period last year, when the company posted net income of $102.2 million, or $2.02 per diluted share.
In the company's earnings announcement, IDACORP CEO Darrel Anderson attributed the drop largely to rain and mild temperatures, which drove down irrigation sales and transmission revenues.
Wheeling revenue was down $5.1 million compared to a year earlier. The company said the drop was due to lower hydropower generation in recent months and mild summer temperatures. Through the first nine months of 2019, Idaho Power's wheeling revenue is down by $3.1 million.
Electricity use per retail customer was also down by $8.6 million, from third quarter 2018. At the same time, the company's third-quarter operations and maintenance expenses rose $4.4 million this year compared to last year. Retail revenues per megawatt-hour through the first nine months of the year are down $1.6 million compared to 2018.
Idaho Power continues to see customer growth. It added about 14,250 new customers during the third quarter, which boosted revenue by $5.5 million. However, that was not enough to offset the drop in sales volumes per customer