Utility Operating Statistics
PG&E NEG Operating Statistics
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PG&E Corporation announced
2001 earnings from operations of $3.02 per share, a 19 percent
increase over results for the year 2000.
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Pacific Gas and Electric
Company grew its earnings from operations by 19 percent to $2.51
per share, or $914 million, over year 2000 results.
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PG&E National Energy
Group grew its contribution to earnings from operations by 27
percent to $0.57 per share, or $209 million, compared with results
in 2000.
(San Francisco) -- PG&E
Corporation (NYSE: PCG) today announced earnings from operations
of $1.1 billion, or $3.02 per share, for the full year 2001. The
Corporation's results reflected a 19 percent increase over earnings
from operations in 2000 of $925 million, or $2.54 per share. Total
reported net income for the year was also $1.1 billion, or $3.02
per share. "The Corporation's financial results for the full year
2001 show that the company's fundamental operations performed solidly
last year," said PG&E Corporation Chairman, CEO and President Robert
D. Glynn, Jr.
Earnings from operations
at Pacific Gas and Electric Company, the Corporation's utility business,
were $914 million, or $2.51 per share, compared with $769 million,
or $2.11 per share, last year. The results included earnings from
operations in the fourth quarter of 2001 of $0.94 per share, compared
with $0.31 for the year-ago quarter. The fourth quarter 2001 results
included the full year of revenues, totaling $151 million, or $0.24
per share, from the retroactive attrition rate adjustment recently
authorized by the California Public Utilities Commission (CPUC).
At the PG&E National Energy
Group (PG&E NEG), income from operations grew to $209 million, or
$0.57 per share, for 2001, compared with $168 million, or $0.45
per share, in the year 2000. The 2001 results included $0.37 per
share from the PG&E NEG's Integrated Energy and Marketing segment,
compared with $0.32 per share in 2000, and $0.21 per share from
its Interstate Pipeline Operations, compared with $0.16 per share
in 2000. PG&E NEG results in 2001 also included $0.01 per share
in eliminations, compared with $0.03 per share in eliminations in
2000.
The PG&E NEG's fourth quarter
2001 earnings from operations were $0.02 per share in the fourth
quarter compared with $0.08 in the fourth quarter 2000, a decrease
driven primarily by reduced power prices and lower volumes due to
mild winter weather in the regions in which the PG&E NEG operates,
offset somewhat by increased trading profits.
2001 Total Net Income
PG&E Corporation reported
total net income of $1.1 billion, or $3.02 per share, for 2001.
For 2000, the Corporation reported a total net loss of $3.36 billion,
or $9.29 per share, after accounting rules required the company
to record a more than $4.1 billion charge for wholesale power costs
and transition costs that it could no longer consider "probable"
of recovery in light of multiple adverse regulatory decisions by
the CPUC.
Prior to the energy crisis,
and in accordance with CPUC requirements, any generation-related
revenues in excess of Pacific Gas and Electric's generation and
wholesale power costs were used to amortize generation-related transition
costs associated with energy industry restructuring. However, throughout
much of 2000 and part of 2001, extreme wholesale power costs prevented
any such revenues from being available for transition cost recovery.
Ultimately, in the fourth quarter of 2000, the company was forced
to write off the balance of these unrecovered transition costs.
Beginning in the second quarter of 2001, reductions in the utility's
costs and increases in its retail rates resulted in some revenues
once again being available to recover the costs. This recovery totaled
$1.26 per share for the full year and is included in the company's
total net income, offsetting costs previously written off.
Total net income for 2001
also includes several other items impacting comparability. These
include an interest expense charge of $0.72 per share, associated
with increased amount of and cost of debt resulting from the energy
crisis; a charge of $0.21 per share for bankruptcy-related costs;
a charge of $0.10 per share to account for the PG&E NEG's exposure
to Enron Corp.; a charge of $0.18 per share for losses at Pacific
Gas and Electric Company stemming from counterparties' decisions
to terminate gas transportation hedges following the decline in
the utility's credit quality; a gain of $0.02 per share from the
cumulative effect of a change in accounting principle; and a charge
of $0.07 per share associated with the California Public Utilities
Commission's rehearing of the utility's 1999 General Rate Case.
Accomplishments at Pacific
Gas and Electric Company in 2001
Pacific Gas and Electric
Company's operational successes in 2001 included critical financial
and operational accomplishments to maintain and increase gas and
electric supplies for customers, highly successful customer energy
efficiency programs to reduce demand, and the filing of a comprehensive
plan to resolve the Chapter 11 process the company initiated in
April. "Pacific Gas and Electric Company surmounted a number of
financial and operational challenges associated with the state's
energy crisis in 2001," said Glynn. "In addition to meeting this
challenge and filing the Plan of Reorganization, our team delivered
on its commitment to provide safe, reliable, and responsive gas
and electric service to its customers."
Among the utility's accomplishments
for the year were the following:
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Negotiating financial
arrangements with power and natural gas suppliers to ensure
they would be able to continue providing gas and electricity
for our customers.
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Receiving the Institute
for Nuclear Power Operations' top rating for safety and operational
performance at Diablo Canyon.
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Facilitating the connection
of 14 new power plants to the transmission grid, totaling 1,200
megawatts (MW).
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Completing 30 critical
transmission capacity projects in order to move more power to
the regions and communities where demand was highest.
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Helping customers save,
through our energy efficiency programs, enough power to serve
90,000 homes for one year, and enough natural gas to serve 19,000
homes for a year.
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Assisting a record-breaking
18.8 million callers to our call centers, nearly a 30 percent
increase over the numbers for the previous year, and another
530,000 callers to our Smarter Energy Line.
The combined contributions
of these efforts significantly helped California optimize supply
and reduce energy usage during the summer of 2001, ultimately avoiding
rotating outages. They also helped enable the utility to earn a
customer-satisfaction rating of good, very good, or excellent from
nearly nine out of 10 customers surveyed.
Accomplishments at PG&E
National Energy Group in 2001
The PG&E NEG maintained
solid operational performance in both its Integrated Energy and
Marketing segment and its Interstate Pipeline operations in 2001.
The PG&E NEG worked successfully throughout the year to manage the
indirect impacts of the utility's Chapter 11 filing and to shape
its strategy in light of the economic downturn and increasingly
challenging market conditions.
"Our team at the PG&E NEG
continued to deliver strong growth in earnings from operations in
2001," said Glynn. Accomplishments at the PG&E NEG in 2001 included
the following:
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Securing independent
investment-grade credit ratings for the PG&E NEG and its energy
trading business.
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Completing several substantial
financings providing capital to invest in generating and pipeline
assets and liquidity to support its energy trading activities.
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Starting commercial
operations in June at the 526-MW Attala power plant in Mississippi,
and in Gallion, Ohio, beginning operations at the final unit
of the 144-MW multi-unit, multi-site peaker project.
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Launching construction
on the 1,092-MW Harquahala plant in Arizona, the 1,080-MW Athens
plant in New York, the 111-MW Plains End facility in Colorado,
and the 1,170-MW Covert generating project in southwest Michigan.
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Taking ownership of
the 66-MW Mountain View wind-generating facility in Southern
California, which sells its power to the California Department
of Water Resources under a 10-year contract.
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Beginning operation
of 21 miles of new natural gas pipeline in the fall as part
of its 2002 mainline expansion project, which will increase
capacity on the system by about 10 percent.
At year's end, the
PG&E NEG's portfolio of controlled megawatts totaled 7,100 megawatts
in operation and 7,740 megawatts in construction. Looking to 2002
and 2003, the PG&E NEG will continue to move forward with all of
the projects currently under construction or with which it has tolling
agreements.
Accounting for PG&E NEG
Synthetic Leases
The Corporation announced
on Feb. 21 that was initiating a thorough review of the accounting
treatment for several synthetic leases used to finance power plant
development at the PG&E NEG. The review confirmed that payments
to the independent equity owners during construction reduced the
investors' equity below the 3 percent minimum requirement to maintain
these leases off balance sheet. As a result, the Corporation's financial
statements now include these financings on balance sheet. The change
in accounting treatment results in no restatement of prior year
earnings, a less than $1 million impact on earnings for the fourth
quarter 2001, and an increase in total assets and liabilities of
$118 million in 1999, $861 million in 2000, and $1.058 billion in
2001.
2002 Guidance and Conclusion
The Corporation estimates
2002 earnings from operations including headroom-the difference
between generation-related revenues collected from customers at
CPUC-authorized rates and our generation related costs-to be in
the range of $3.00 per share. (On a regulatory accounting basis,
headroom recovers previously uncollected generation related costs
that were written off at December 31, 2000.) The guidance is based
on the belief that results at the PG&E NEG in 2002 will be down
somewhat from 2001, and that it is not prudent to assume the utility's
extraordinary 2001 performance in areas such as Diablo Canyon and
California Gas Transmission will necessarily recur in 2002.
On a quarterly basis, the
amount of headroom in the utility's results is expected to fluctuate
materially due to many factors, including the outcome of regulatory
proceedings and other regulatory actions, changes in estimates of
previously incurred energy procurement costs, sales volatility,
and the impact of the end of the rate freeze period. Other factors
that could affect actual 2002 earnings are listed at the end of
this news release.
"As we enter a major transition
year for our company, we will continue our focus on maintaining
the strong operational and financial fundamentals that enabled us
to deliver solid results for 2001," said Glynn. "We will also continue
to move forward with our plan of reorganization, which is the foundation
for enabling Pacific Gas and Electric Company to emerge from bankruptcy
and reaffirming our company's financial health."
A conference call with
the financial community will be held today at 10:30 AM Pacific time
to discuss the company's results for the year. The call will be
open to the public on a listen-only basis via webcast. Please visit
our website www.pgecorp.com for more information and instructions
for accessing the webcast. A replay of the conference call will
be available toll-free by calling 877-690-2090, and also will be
available on our website. International callers will be able to
access the replay by dialing 402-220-0699.
* Terms Used
in This Release
Attrition Rate Adjustment
- An adjustment to the utility's base revenue requirement to cover
changes in operating and maintenance expenses, income taxes, depreciation,
and rate base that occur in the years between General Rate Case
proceedings.
Tolling Agreement - Contracts
that provide PG&E Corporation with the rights to sell electricity
generated by facilities owned and operated by another party. Under
such arrangements, PG&E Corporation supplies the fuel to the power
plant, and then sells the plant's output in the competitive market.
This press release includes
forward-looking statements about 2002 earnings that are necessarily
subject to various risks and uncertainties. These statements are
based on current expectations and assumptions which management believes
are reasonable and on information currently available to management.
Actual results could differ materially from those contemplated by
the forward-looking statements. Although PG&E Corporation and the
Utility are not able to predict all the factors that may affect
future results, some of the factors that could cause future results
to differ materially from those expressed or implied by the forward-looking
statements, or from historical results, include:
- The outcome of the Utility's bankruptcy
case;
- The effect of the Utility's bankruptcy
proceedings on PG&E Corporation and PG&E NEG and in particular,
the impact a protracted delay in the Utility's bankruptcy proceedings
could have on PG&E Corporation's liquidity and access to capital
markets;
- The outcome of the CPUC's pending
investigation into whether the California investor-owned utilities,
including the Utility, have complied with past CPUC decisions,
rules, or orders authorizing their holding company formations,
the outcomes of the lawsuits brought by the California Attorney
General, the City and County of San Francisco, and People of
the State of California, against PG&E Corporation alleging unfair
or fraudulent business acts or practices based on alleged violations
of conditions established in the CPUC's holding company decisions,
and the outcome of the California Attorney General's petition
requesting revocation of PG&E Corporation's exemption from the
Public Utility Holding Company Act of 1935, and the effect of
such outcomes, if any, on PG&E Corporation, the Utility, and
PG&E NEG;
- The extent to which the ability of
PG&E Corporation to obtain financing or capital on reasonable
terms is affected by the interpretation of the CPUC's holding
company conditions, conditions in the general economy, the energy
markets, or capital markets;
- The outcome of the Utility's various
regulatory proceedings pending at the CPUC, including the proceeding
to determine future ratemaking for the Utility's retained generation
(primarily hydroelectric assets and the Diablo Canyon Nuclear
Power Plant), the 2002 attrition rate application, and the 2003
General Rate Case;
- Whether the CPUC's March 27, 2001
accounting decision regarding the Utility's under-collected
wholesale power purchase costs is upheld and whether the Utility's
lawsuit against the CPUC for recovery of those costs is successful;
- Any changes in the amount of transition
costs the Utility is allowed to collect from its customers,
and the timing of the completion of the Utility's transition
cost recovery;
- The amount and timing of regulatory
valuation of the Utility's hydroelectric and other non-nuclear
generation assets; § The impact on earnings of the future operating
performance at the Utility's Diablo Canyon Nuclear Power Plant
(Diablo Canyon);
- Legislative or regulatory changes
affecting the electric and natural gas industries in the United
States, including the pace and extent of efforts to restructure
the electric and natural gas industries;
- The volatility of commodity fuel and
electricity prices (which may result from a variety of factors,
including weather; the supply and demand for energy commodities;
the availability of competitively priced alternative energy
sources; the level of production and availability of natural
gas, crude oil, and coal; transmission or transportation constraints;
federal and state energy and environmental regulation and legislation;
the degree of market liquidity; and natural disasters, wars,
embargoes, and other catastrophic events); any resulting increases
in the cost of producing power and decreases in prices of power
sold, and whether the Utility's and PG&E NEG's strategies to
manage and respond to such volatility are successful;
- PG&E NEG's ability to obtain financing
from third parties or from PG&E Corporation for its planned
development projects and related equipment purchases and to
refinance PG&E NEG's and its subsidiaries' existing indebtedness
as it matures, in each case, on reasonable terms, while preserving
PG&E NEG's credit quality; which ability could be negatively
affected by conditions in the general economy, the energy markets,
or capital markets; and the extent to which the CPUC's holding
company conditions may be interpreted to restrict PG&E Corporation's
ability to provide financial support to PG&E NEG;
- The extent to which PG&E NEG's current
or planned development of generation, pipeline, and storage
facilities are completed and the pace and cost of that completion,
including the extent to which commercial operations of these
development projects are delayed or prevented because of various
development and construction risks such as PG&E NEG's failure
to obtain necessary permits or equipment, the failure of third-party
contractors to perform their contractual obligations, or the
failure of necessary equipment to perform as anticipated;
- The extent and timing of generating,
pipeline, and storage capacity expansion and retirements by
others;
- The performance of PG&E NEG's projects
and the success of PG&E NEG's efforts to invest in and develop
new opportunities;
- Restrictions imposed upon PG&E Corporation
and PG&E NEG under certain term loans of PG&E Corporation including
maintenance of minimum segregated cash balances by PG&E Corporation
and prohibitions on payment of dividends by both PG&E Corporation
and PG&E NEG;
- Future sales levels which, in the
case of the Utility, will be affected by when the CPUC ultimately
determines that direct access has been suspended and the level
of exit fees that may be imposed on direct access customers,
and general economic and financial market conditions, and changes
in interest rates;
- Volatility resulting from mark-to-market
accounting and the extent to which the assumptions underlying
PG&E NEG's and the Utility's mark-to market accounting and risk
management programs are not realized;
- The effect of compliance with existing
and future environmental laws, regulations, and policies, the
cost of which could be significant;
- Heightened rating agency criteria
and the impact of changes in credit ratings on PG&E NEG's future
financial condition, particularly a downgrade below investment
grade which would impair PG&E NEG's ability to meet liquidity
calls in connection with its trading activities and obtain financing
for its planned development projects;
- New accounting pronouncements; and
- The outcome of pending litigation.
Please visit our website:
www.pgecorp.com