Mirant Chief Predicts Power Supply Crunch
By Margaret Newkirk, The Atlanta Journal-Constitution
May 11–The chairman of Atlanta-based Mirant Corp. is predicting a power supply crunch in its markets that will be good for the company — and bad for the public and energy industry.
The problem could be particularly acute in the mid-Atlantic states, Ed Muller told financial analysts Thursday.
Power supply reserves there could fall into the single digits within a few years, he said — a level that would bring blackouts and brownouts.
The supply crunch would drive up profits for Mirant, a competitive power supplier that sells into deregulated power markets.
Still, “this is not healthy,” Muller said. “It’s great for somebody in our business. But it’s also risky, in a market sense. We are in a business that has an obligation to serve. I don’t like to be in an area where there isn’t enough equipment running to supply it.”
Muller made his prediction during an analyst call Thursday, after the company reported a first-quarter net loss of $52 million, or 20 cents per share, compared with a $467 million profit, or $1.51 per share, during the first three months of last year.
The company attributed the drop to a large hedging loss. Minus that loss and other one-time events, Mirant’s adjusted first-quarter earnings were $218 million, up from $142 million last year.
Muller said it will be difficult to build new generation supplies in deregulated markets, because of the political and regulatory hurdles.
Still, “the markets we’re in need new capacity,” he said.
Mirant has plans to build new capacity on sites where it already has plants, Muller said.
In Thursday’s earnings report, Mirant didn’t offer any earnings guidance going forward.
The company also didn’t elaborate further on a “strategic review” it announced last month.
Mirant has hired JPMorgan to help it consider options for the future, including the option of putting the company up for sale.
Mirant is a spinoff of Southern Co., the Atlanta-based utility holding company that also owns Georgia Power.
It emerged from a long bankruptcy in January 2006.
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