Can anyone provide an analysis of the recent tornado on the short term financial outlook for this company? It looks as if at somewhere between 2%- 3% of their utility business comes from Joplin, MO. Can anyone confirm this? Could we expect a big decrease in revenue and an increase in short term debt?
From The 2010 Annual report under the section RISK FACTORS:
Operations risks may adversely affect our business and financial results.
The operation of our electric generation, and electric and gas transmission and distribution systems involves many risks, including breakdown or failure of expensive and sophisticated equipment, processes and personnel performance; operating limitations that may be imposed by equipment conditions, environmental or other regulatory requirements; fuel supply or fuel transportation reductions or
Table of Contents
interruptions; transmission scheduling constraints; and catastrophic events such as fires, explosions, severe weather or other similar occurrences.
From the company's web site:
Empire's electrical system has sustained severe damage due to the devastating tornado that tore through Joplin on Sunday, May 22. The number of customer outages can fluctuate due to weather or other challenges that may arise during the restoration process. The largest number of customers without power is in Joplin; however, customers in Diamond, Granby, Sarcoxie, and Wentworth are also experiencing outages due to severe weather. In additoin to Empire's line crews, nearly 200 additional linemen and over 100 vegetation management personnel work to repair Empire's electrical system and restore customers to service. We will provide updates as more information becomes available.
The 10% of their customers currently out of service is the least of their problems.
According to the news reports, many homes have been destroyed. These will not be using power after EDE's lines are back up and EDE restores service. Many businesses will remain closed until repairs are done. Likewise a drop in usage.
Depending on insurance, the impact of repair costs could be severe. New Orleans' utility filed for bankruptcy after the hurricane because of high costs of system restoration.
This will have a substantial long and short term effect on their financial health.