Comverge Lands Another Deal, But Lowers Estimates

Chalk up one more utility deal for Comverge Inc. (NSDQ: COMV) — and delays in others that might see the demand-response company earn less than it hoped to in the fourth quarter of 2008.

Comverge said Monday it had landed a five-year deal with Progress Energy to provide its demand response hardware and software to the utility’s EnergyWise residential energy efficiency program in North Carolina and South Carolina.

Comverge is aiming to save the utility 170 megawatts on its peak load by installing and managing in-home energy displays, smart thermostats and digital controls to curtail power consumption when it’s in greatest demand.

It’s similar to a deal the East Hanover, N.J.-based company announced Friday with utility Pepco, which is doing a residential energy efficiency project in Maryland and Washington, D.C. With more than 500 utility customers and 2.2 gigawatts under management, Comverge is a big name in the demand-response business.

But Friday also saw Comverge report that installation delays and deferred settlements in some of its its “pay-for-performance” contracts would lead it to lower its fourth-quarter 2008 earnings estimates to $75 million to $79 million, down from previous estimates of $80 million to $90 million, according to a research note from Thomas Weisel Partners.

The note’s authors did revise downward their forecasts for the company’s 2009 earnings, from $110.4 million to $98.2 million, on concerns about the ongoing recession and a slowing of smart meter deployments. Similar concerns caused analysts to downgrade smart meter maker Itron Inc. (NSDQ: ITRI) in late October, even after it posted third-quarter revenues that beat expectations.

Still, Thomas Weisel Partners didn’t appear too worried about Comverge’s reduced fourth-quarter expectations, saying that the company is looking at “breakout years” ahead as utilities push forward in a big way with smart grid-related projects (see For 2009, It’s All About Smart Grid and Storage).

The inclusion of billions of dollars for smart grid efforts in the draft stimulus bill making its way through Congress could bolster the fortunes of companies with equipment, software and services aimed at bringing two-way communication and enhanced utility control to the nation’s transmission grid.