Tuesday, February 10, 2009

Challenging Conditions for TECO Unit in Guatemala

Florida-based Teco Energy's (NYSE: TE) Guatemalan operations will face challenging conditions this year, according to company CFO Gordon Gillette.

Results in 2009 from Guatemala will be hurt by last month's steam engine-induced forced outage at the 120MW San José coal-fired plant and the full-year effect of a reduction in the value-added distribution (VAD) rate, Gillette said in a webcast.

Teco's assets in Guatemala also include the 78MW gas-fired Alborada plant and a 24% stake in distributor Eegsa. The San José plant is due to come back online around mid-March.

Last month, the company announced it had delivered a notice of intent to Guatemala's government announcing plans to file an arbitration claim over the new VAD rate that came into effect on August 1.

In the fourth quarter of 2008, Teco Guatemala posted a net loss of US$0.2mn versus a net profit of US$11.4mn in 4Q07. The new VAD rate reduced earnings by roughly US$3mn in the quarter, Gillette said.

Also impacting Teco Guatemala's bottom line last quarter were additional taxes from the repatriation of cash and investments and lower earnings from San José due to lower spot energy sales.


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