Utility Operating Statistics
- PG&E Corporation's consolidated net income
for the third quarter of 2003 was $1.24 per share,
compared with $1.19 per share for the same quarter
last year. (All “per share” amounts in this release
are presented on a diluted basis.)
- Consolidated earnings from operations for PG&E
Corporation and Pacific Gas and Electric Company
were $0.42 per share, compared with $0.61 per share
for the same quarter last year.
- Pacific Gas and Electric Company's earnings from
operations, without headroom, were $0.42 per share,
compared with $0.59 per share for the same quarter
last year.
(San Francisco) -- PG&E Corporation (NYSE: PCG)
earned $510 million, or $1.24 per share, in consolidated
net income for the third quarter of 2003, compared
with $466 million, or $1.19 per share, for the third
quarter of 2002.
Third-quarter 2003 consolidated earnings from operations
for PG&E Corporation and its California utility
business, Pacific Gas and Electric Company, were $174
million, or $0.42 per share, compared with $241 million,
or $0.61 per share for the third quarter last year.
“PG&E Corporation delivered earnings from operations
on target for the quarter,” said Robert D. Glynn,
Jr., PG&E Corporation Chairman of the Board, CEO
and President. “We continue to see a clear path to
stability and increasing financial performance through
approval and implementation of the proposed settlement
agreement to allow Pacific Gas and Electric Company
to exit Chapter 11 by the end of the first quarter
of 2004. We believe the company is on track and on
schedule to achieve that objective.”
PG&E Corporation's consolidated earnings from
operations do not include results from National Energy
& Gas Transmission, Inc. (NEGT, previously PG&E
National Energy Group, Inc.). Also excluded from earnings
from operations are headroom at Pacific Gas and Electric
Company, as well as certain non-operating income and
expenses that are listed as “Items Impacting Comparability”
on the attached supplemental financial table, which
reconciles earnings from operations with reported
earnings under GAAP.
Income from headroom (the difference between Pacific
Gas and Electric Company's generation-related costs
and generation-related revenues) was $495 million,
or $1.19 per share, for the quarter compared with
$376 million, or $0.95 per share, in the third quarter
of 2002. Total headroom through the third quarter
of 2003 was a positive $635 million, or $1.55 per
share.
Items impacting comparability at the Corporation
and Pacific Gas and Electric Company included incremental
interest costs of $130 million, or $0.30 per share,
as well as Chapter 11 costs and costs related to the
California energy crisis of $24 million, or $0.06
per share, generally consisting of external legal
fees, financial advisory fees and other related costs.
The Corporation's quarterly report on Form 10-Q will
disclose the earnings impact of accounting for stock
options if the company were to record them as an expense.
For the third quarter of 2003, accounting for stock
options as an expense would have reduced earnings
by $0.02 per share.
PACIFIC GAS AND ELECTRIC COMPANY
Pacific Gas and Electric Company contributed $174
million, or $0.42 per share, to earnings from operations
for the quarter, compared with $232 million, or $0.59
per share, for the same quarter last year.
As expected, the difference between Pacific Gas and
Electric Company's third quarter 2003 and third quarter
2002 operating earnings per share largely reflected
the continued absence of a revenue increase through
the 2003 General Rate Case (GRC) pending at the California
Public Utilities Commission (CPUC). The additional
revenues are necessary to offset additional expenses
for rate base growth, inflation, benefits and other
costs. Other items accounting for the quarter-over-quarter
difference were lower gas transmission revenues in
2003, as increased hydroelectric production reduced
the demand for some gas-fired generation, and an increase
in 2003 in the average number of common shares outstanding.
PROPROSED 2003 GRC SETTLEMENT AGREEMENT
In September, the utility, together with the CPUC's
Office of Ratepayer Advocates and various consumer
groups, reached a proposed settlement agreement to
resolve the 2003 GRC. Under the settlement, the utility
would receive an increase in revenues of $236 million
for electric distribution, $52 million for gas distribution,
and $38 million for electric generation. The revenue
increases will be effective for the full year 2003.
The agreement would also provide for timely and predictable
revenue increases in 2004, 2005 and 2006, to cover
higher expenses for rate base growth and inflation.
A final 2003 GRC decision is expected early next year,
and if received in time, will be booked fully in the
utility's fourth quarter 2003 results.
PROPOSED CHAPTER 11 SETTLEMENT AGREEMENT
During the third quarter, the proposed settlement
agreement to resolve Pacific Gas and Electric Company's
Chapter 11 case continued through the approval processes
in the federal bankruptcy court and at the CPUC.
A new plan of reorganization based on the terms of
the proposed settlement agreement received nearly
unanimous support in a vote by creditors, with 97
percent of voting creditors and all voting creditor
classes electing to approve the plan. Confirmation
hearings on the plan began this week in the bankruptcy
court and are scheduled to conclude within several
weeks.
The CPUC's public hearings on the proposed settlement
agreement were concluded on schedule in late September.
A proposed decision from the administrative law judge
is expected in November, and a final decision by the
CPUC is expected in December.
NATIONAL ENERGY & GAS TRANSMISSION
On July 8, 2003, National Energy & Gas Transmission
(NEGT), then named PG&E National Energy Group,
Inc., and certain of its subsidiaries filed for Chapter
11. PG&E Corporation no longer has representatives
on NEGT's Board of Directors and no longer retains
significant influence over the ongoing operations
of NEGT. PG&E Corporation's equity interest in
NEGT is expected to be eliminated when the bankruptcy
court approves a plan of reorganization for NEGT.
As appropriate under accounting rules, as of July
8, 2003, PG&E Corporation is no longer including
NEGT in the Corporation's consolidated results and
has begun using the cost method of accounting to reflect
its ownership interest in NEGT.
PG&E Corporation's consolidated net income for
the third quarter includes financial results for NEGT
only for the period July 1 through July 7, 2003.
GUIDANCE FOR 2003 AND 2004 EARNINGS FROM
OPERATIONS
Reaffirming its previously issued earnings guidance,
the Corporation expects 2003 earnings from operations
for PG&E Corporation and Pacific Gas and Electric
Company to be in the range of $1.90-$2.00 per share,
not including headroom. For 2004, earnings from operations
are expected to be in the range of $2.00-$2.10 per
share.
Guidance estimates reflect forecasted consolidated
results for PG&E Corporation and Pacific Gas and
Electric Company; guidance does not include NEGT.
Among the assumptions on which current guidance for
2003 is based is the expectation that the CPUC issues
a decision in the utility's 2003 GRC in time to be
included in the company's fourth quarter financial
results, and that the outcome is consistent with the
proposed GRC settlement agreement. In addition, guidance
for 2004 is based on a number of assumptions, including
the assumption that the proposed settlement agreement
to resolve the utility's Chapter 11 case is approved
and the contemplated plan of reorganization is implemented
in a timely manner.
PG&E Corporation bases guidance on “earnings
from operations” in order to provide a measure
that allows investors to compare the underlying
financial performance of the business from one period
to another, exclusive of items that management believes
do not reflect the normal course of operations.
Earnings from operations are not a substitute or
alternative for total net income presented in accordance
with generally accepted accounting principles.
The estimated range for 2003 earnings on a GAAP or
"reported" basis for PG&E Corporation
and Pacific Gas and Electric Company is $1.26-$2.18
per share. For 2004, the estimated range for reported
earnings for PG&E Corporation and Pacific Gas
and Electric Company is $1.78-$1.93 per share. The
attachment to this news release reconciles estimated
earnings from operations with estimated total net
income.
A conference call with the financial community will
be held today at 2:30 PM Eastern Standard Time to
discuss PG&E Corporation's results for the quarter.
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) 470-0867,
and also will be available on our website. International
callers will be able to access the replay by dialing
(402) 220-0642.
This press release and the attachment contain forward-looking
statements regarding estimated earnings for 2003 and
2004, and the outcome of the Utility's Chapter 11
proceeding. These statements are based on current
expectations and assumptions which management believes
are reasonable and on information currently available
to management but are necessarily subject to various
risks and uncertainties. Actual results could differ
materially from those contemplated by the forward-looking
statements. Some of the factors that could cause future
results to differ materially include:
The outcome of the Utility's Chapter 11 proceeding,
including whether the proposed settlement agreement
among the Utility, PG&E Corporation, and the staff
of the CPUC becomes effective and whether the Settlement
Plan is implemented;