High Emissions Credit Costs Continue To Hurt Cinergy
Dow Jones & Company, Inc. - Oct 22
The Cincinnati-based electric utility reported Friday a 19% decline in third quarter-earnings compared with a year ago, mainly caused by cool weather that lowered electricity demand, the high price of eastern coal and soaring emissions credit prices.
Cinergy spokesman Steve Thrash said the higher costs were due to the high price of SO2 allowances relative to third-quarter 2003 prices.
"The market price for SO2 has increased dramatically from last year to this year," Thrash said.
Cinergy reported that its second-quarter earnings suffered from increases in both nitrogen oxides and SO2 prices, though the bulk of those expenses were due to SO2 prices. SO2 roughly tripled between January and July, when it traded around $650 /ton. SO2 is now trading at about $570 /ton.
Most other utilities with large coal fleets, however, didn't cite added costs from expensive SO2 allowances. Thrash couldn't say what was unique about Cinergy.
Thrash said NOx prices didn't eat into the company's earnings this quarter, despite the fact that the company was forced to turn off a NOx control device at its 3,500 megawatt Gibson Station plant in Indiana.
The device was causing the plant to dump clouds of sulfuric acid mist onto Mt. Carmel, Ill., a small town just across the state line. Cinergy agreed to shut off the device, which is called a selective catalytic reduction unit, while it searched a solution to the problem.
The company was forced to purchase extra NOx credits to cover the increased emissions that resulted from not runnoing the device, but Thrash said the added NOx credit expenses didn't hurt the company's earnings because it Indiana allowed the company too pass through the added costs onto the ratepayers.
-By Matthew Dalton , Dow Jones Newswires; 201-938-4604; matthew.dalton@dowjones.com
Dow Jones Newswires 10-22-04 1657ET
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