LOS ANGELES Electricity price hikes in Nevada this week are expected to raise casino power costs 20% or more, which will wreak havoc on earnings in 2001, casino operators and analysts said. Nevada s major utilities raised electricity rates by 17.6% for most customers, but the hikes for major users like the state s big casinos are being hiked even more, said Glenn Schaeffer, CFO of Mandalay Resort Group.
Schaeffer said the higher power rates will have a “negative” effect on earnings, but added it is still too early to determine the actual impact. He also said it is too early to say if Mandalay will raise room rates or add room surcharges to try to recoup some of the cost increases. Marc Mutkowski, an analyst at Deutsche Banc Alex.Brown, predicted that most casino operators will see a 25-30% increase in their power cost. (3/2/01)
SOURCE:Reuters