Sierra Pacific Resources Reports 2007 Second Quarter Earnings

RENO, Nev., July 30 /PRNewswire-FirstCall/ -- Sierra Pacific Resources today reported earnings applicable to common stock of $25.8 million, or 12 cents per share, for the three months ended June 30, 2007, compared with $27.8 million, or 14 cents per share, for the same period in 2006. Earnings for the six months ended June 30, 2007, totaled $41.4 million, or 19 cents per share, compared with $29.1 million, or 14 cents per share, for the same period a year earlier.

Earnings for the three months ended June 30, 2007, decreased slightly compared with the same quarter in 2006. Higher operating revenues and lower interest charges partially offset an increase in operating expenses, a decrease on carrying costs on deferred energy balances, and costs associated with a settlement with environmental agencies concerning Nevada Power's Reid Gardner Generating Station.

The increase in earnings for the six months ended June 30, 2007, was primarily due to lower interest charges at Sierra Pacific Power and the parent company; the settlement with the Public Utilities Commission of Nevada regarding accrued interest on Nevada Power Company's 2001 deferred energy rate case, and the carrying charge for the Chuck Lenzie Generating Station in southern Nevada.

"We are pleased with our financial results and to report that our company's financial condition continues to strengthen," said Walter Higgins, chairman and chief executive officer of Sierra Pacific Resources. "Our continuing strong performance was instrumental in our Board of Directors' decision this past weekend to declare a quarterly cash dividend of 8 cents per common share to shareholders of record on August 24, 2007, and payable on September 12, 2007. This is the first dividend declared by the company since February 2002 and was one of our major financial goals as our company recovered from the severe financial difficulties encountered as a result of the Western Energy Crisis of 2000-2001."

Michael Yackira, president and chief operating officer, said, "We are especially proud of our utilities' operations and of our employees. We have been successful in meeting challenging weather conditions during recent weeks. Both Nevada Power in southern Nevada and Sierra Pacific Power recently set record highs for electric demand. On July 5, Nevada Power Company set a record system peak of 5,866 megawatts, surpassing by more than 200 megawatts the previous record of 5,623 megawatts set in July of 2006. On the same day, Sierra Pacific Power also reached a system peak of 1,743 megawatts, breaking a previous record of 1,701 megawatts set in 2005. Our employees also met the challenges of wildfires that affected northern Nevada and the Lake Tahoe region of California. Through their efforts in perilous conditions, we either keep the lights on or quickly restored power when lost."

Nevada Power Company Results

Nevada Power Company reported net income of $23.6 million for the second quarter of 2007, compared with $28.5 million for the same period in 2006. For the six months ended June 30, 2007, Nevada Power recognized net income of $28.2 million compared with $25.2 million for the same period last year.

Nevada Power's retail electric revenues increased for the three and six month periods ending June 30, 2007, due to customer growth and increases in rates compared with the same periods in 2006. The number of retail customers increased by 3.2 percent and 3.4 percent for the three and six month periods ending June 30, 2007.

The utility's purchased power costs decreased for the three and six month periods ending June 30, 2007, because of Nevada Power's increased reliance on internal generation, which was more economical than purchased power.

Sierra Pacific Power Company Results

For the second quarter of 2007, Sierra Pacific Power reported earnings applicable to common stock of $10 million compared with $7.6 million for the same period a year earlier. During the six months ended June 30, 2007, Sierra Pacific Power recognized earnings of $32 million compared with $19.9 million for the same period in 2006.

Sierra Pacific Power's retail electric revenues increased for the three and six month periods ended June 30, 2007, primarily due to customer growth and increases in retail rates. The number of retail customers increased by 2.1 percent and 2.3 percent for the three and six month periods ending June 30, 2007.

The utility's retail natural gas revenues decreased for the three and six month periods ended June 30, 2007, as compared with the same periods a year earlier primarily because of warmer winter temperatures and decreases in retail rates. Partially offsetting these decreases were increases in retail gas customers of 3.3 percent and 3.5 percent for the three and six month periods ending June 30, 2007.

Webcast Scheduled for 7 a.m. PDT Today

Senior management of Sierra Pacific Resources will review the company's financial results, regulatory issues and other matters during a conference call and live webcast today, July 30, at 7 a.m. Pacific Daylight Time.

The webcast will be accessible on the Sierra Pacific Resources web site: http://www.sierrapacificresources.com/.

An archived version of the webcast will remain on the Sierra Pacific Resources' web site for approximately one month following the live webcast. To listen to a recording of the call by telephone, call (800) 475-6701 and use the conference call ID number, 880298, to access the recording. International callers should dial (320) 365-3844.

Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada.

This press release contains forward-looking statements regarding the future performance of Sierra Pacific Resources and its subsidiaries, Nevada Power Company and Sierra Pacific Power Company, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. For Sierra Pacific Resources, these risks and uncertainties include, but are not limited to, Sierra Pacific Resources' ability to maintain access to the capital markets, the financial performance of Sierra Pacific Resources' subsidiaries, Nevada Power Company and Sierra Pacific Power Company, and the discretion of Sierra Pacific Resources' Board of Directors with respect to the payment of future dividends based on its periodic review of factors that ordinarily affect dividend policy, such as current and prospective financial condition, earnings and liquidity, prospective business conditions, regulatory factors, and dividend restrictions in Sierra Pacific Resources' and its subsidiaries' financing agreements. For Nevada Power Company and Sierra Pacific Power Company, these risks and uncertainties include, but are not limited to, unfavorable rulings in their pending and future regulatory filings, their ability to maintain access to the capital markets for general corporate purposes and to finance construction projects, and their ability to purchase sufficient fuel, natural gas and power to meet their power demands and natural gas demands for Sierra Pacific Power Company. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Sierra Pacific Resources, Nevada Power Company and Sierra Pacific Power Company are contained in their Quarterly Reports on Form 10-Q for the quarter ended March 31, 2007 and their Annual Reports on Form 10-K for the year ended December 31, 2006, filed with the SEC. The Companies undertake no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Gross margin is presented by Nevada Power Company and Sierra Pacific Power Company in order to provide information by segment that management believes aids the reader in determining how profitable the electric and gas business is at the most fundamental level. Gross margin, which is a "non-GAAP financial measure" as defined in accordance with SEC rules, provides a measure of income available to support the other operating expenses of the business and is utilized by management in its analysis of its business.

Nevada Power Company and Sierra Pacific Power Company believe presenting gross margin allows the reader to assess the impact of regulatory treatment and their overall regulatory environment on a consistent basis. Gross margin, as a percentage of revenue, is primarily impacted by the fluctuations in regulated electric and natural gas supply costs versus the fixed rates collected from customers. While these fluctuating costs impact gross margin as a percentage of revenue, they only impact gross margin amounts if the costs cannot be passed through to customers. Gross margin, which Nevada Power Company and Sierra Pacific Power Company calculate as operating revenues less fuel and purchased power costs, provides a measure of income available to support the other operating expenses. Gross margin changes based on such factors as general base rate adjustments (which are required to be filed by statute every three years) and reflect Nevada Power Company and Sierra Pacific Power Company's strategy to increase internal power generation versus purchased power, which generates no gross margin. Reconciliations between GAAP operating revenues and gross margin are provided in tables herein. These non- GAAP measures should not be considered as substitutes for the GAAP measures.

The companies expect to file their Form 10-Qs for the period ended June 30, 2007, with the Securities and Exchange Commission on or about August 7, 2007, at which time the 10-Qs will be available without charge through the EDGAR system at the SEC's website. The Form 10-Q reports will also be posted on Sierra Pacific Resources' website, http://www.sierrapacificresources.com/.

Financial Highlights (Dollars in thousands, except per share amounts) (Unaudited) Sierra Pacific Resources Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Operating revenues $851,894 $821,919 $1,608,325 $1,528,975 Other operating expenses $92,268 $83,081 $177,015 $173,357 Maintenance $30,633 $23,426 $54,378 $45,356 Depreciation and amortization $59,678 $56,622 $115,911 $114,083 Income taxes / (benefits) $7,244 $5,310 $6,489 $(1,594) Taxes other than income $11,640 $13,274 $24,619 $24,938 Operating income $86,431 $90,683 $148,361 $150,260 Other income (expenses): Income taxes $(4,675) $(8,758) $(16,058) $(16,943) Interest charges $70,617 $78,288 $140,286 $150,887 Preferred stock dividend requirements $- $1,366 $- $2,341 Net Income Applicable to Common Stock $25,754 $27,836 $41,361 $29,078 Amount per share basic and diluted - Net income applicable to common stock $0.12 $0.14 $0.19 $0.14 Weighted Average Shares of Common Stock Outstanding: Basic - 221,412,345 200,897,101 221,329,347 200,882,857 Diluted - 221,821,195 201,292,738 221,738,312 201,279,301 Capital Structure June 30, 2007 June 30, 2006 Current maturities of long-term debt $109,092 1.5% $28,640 0.4% Long-term debt 4,291,833 60.7% 4,403,714 67.5% Total Debt $4,400,925 62.2% $4,432,354 67.9% Common shareholders' equity $2,673,234 37.8% $2,090,491 32.1% Total Capitalization (including current maturities of long- term debt) $7,074,159 100.0% $6,522,845 100.0% Nevada Power Company Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Operating revenues $575,108 $543,869 $993,273 $925,144 Other operating expenses $55,162 $47,705 $106,001 $101,838 Maintenance $20,319 $14,431 $37,783 $28,588 Depreciation and amortization $38,833 $34,884 $74,594 $69,121 Income taxes / (benefits) $8,654 $7,859 $442 $(236) Taxes other than income $6,692 $7,563 $14,426 $14,158 Operating income $61,228 $62,019 $89,196 $87,682 Other income (expenses): Allowance for other funds used during construction $3,247 $2,725 $6,345 $8,154 Carrying charge for Lenzie $5,998 $9,135 $16,080 $13,166 Reinstated interest on deferred energy $- $- $11,076 $- Income taxes $(3,553) $(6,641) $(14,131) $(13,050) Interest charges $44,268 $46,955 $88,260 $88,149 Net Income $23,604 $28,456 $28,186 $25,160 Capital Structure June 30, 2007 June 30, 2006 Current maturities of long- term debt $7,449 0.2% $6,240 0.1% Long-term debt 2,655,630 54.6% 2,670,057 60.3% Total Debt $2,663,079 54.8% $2,676,297 60.4% Common shareholder's equity $2,200,590 45.2% $1,755,605 39.6% Total Capitalization (including current maturities of long-term debt) $4,863,669 100.0% $4,431,902 100.0% Sierra Pacific Power Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Operating revenues $276,734 $277,319 $614,733 $602,816 Other operating expenses $35,994 $33,119 $68,842 $67,294 Maintenance $10,314 $8,995 $16,595 $16,768 Depreciation and amortization $20,845 $21,738 $41,317 $44,962 Income taxes / (benefits) $2,686 $2,878 $11,046 $9,727 Taxes other than income $4,902 $5,671 $10,088 $10,689 Operating Income $22,213 $24,803 $56,124 $54,794 Other income (expenses): Allowance for other funds used during construction $3,365 $1,449 $6,834 $2,152 Income taxes $(1,282) $(1,199) $(2,493) $(2,022) Interest charges $15,454 $18,084 $30,237 $36,240 Dividend requirements of preferred stock $- $1,366 $- $2,341 Earnings Applicable to Common Stock $10,008 $7,633 $31,976 $19,930 Capital Structure June 30, 2007 June 30, 2006 Current maturities of long- term debt $101,643 4.8% $22,400 1.2% Long-term debt 1,085,764 51.6% 1,072,566 58.1% Total Debt $1,187,407 56.4% $1,094,966 59.3% Common shareholder's equity $916,994 43.6% $750,611 40.7% Total Capitalization (including current maturities of long-term debt) $2,104,401 100.0% $1,845,577 100.0% RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Gross Margin (Dollars in thousands) (Unaudited) Nevada Power Company Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Operating Revenues: Electric $575,108 $543,869 $993,273 $925,144 Energy Costs: Purchased Power $175,716 $187,093 $271,310 $348,689 Fuel for power generation 140,773 151,694 304,858 241,516 Deferral of energy costs-net 67,731 30,621 94,663 33,788 $384,220 $369,408 $670,831 $623,993 Gross Margin $190,888 $174,461 $322,442 $301,151 Sierra Pacfic Power Company Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Operating Revenues: Electric $245,356 $244,022 $498,235 $482,794 Gas 31,378 33,297 116,498 120,022 $276,734 $277,319 $614,733 $602,816 Energy Costs: Purchased Power $86,309 $69,608 $169,619 $161,756 Fuel for power generation 51,285 62,474 115,354 115,761 Deferral of energy costs-electric-net 18,770 22,328 32,631 23,233 Gas purchased for resale 19,862 24,352 91,508 91,748 Deferral of energy costs-gas-net 3,554 1,353 1,609 6,084 $179,780 $180,115 $410,721 $398,582 Energy Costs by Segment: Electric $156,364 $154,410 $317,604 $300,750 Gas 23,416 25,705 93,117 97,832 $179,780 $180,115 $410,721 $398,582 Gross Margin by Segment: Electric $88,992 $89,612 $180,631 $182,044 Gas 7,962 7,592 23,381 22,190 $96,954 $97,204 $204,012 $204,234