(San Ramon, CA) -- In remarks today at the joint
annual meeting of the shareholders of PG&E Corporation
and Pacific Gas and Electric Company, PG&E Corporation
(NYSE: PCG) President and CEO Peter Darbee and other
members of the senior management team presented a solid
outlook for 2005 and beyond.
Darbee, together with Gordon Smith, Pacific Gas and
Electric Company President and CEO, and Chris Johns,
PG&E Corporation Chief Financial Officer, reviewed
the Corporation’s 2004 accomplishments and the
outlook for continued solid financial performance,
new utility investments to better serve customers,
and the transformation of the Pacific Gas and Electric
Company’s operations in order to deliver value
for customers and shareholders.
“PG&E is stronger now than at any time
in the past decade,” Darbee told shareholders. “The
balance sheet is solid. Cash flows are healthy. And
our credit is sound. … Our goal is to use our
strong platform to identify and implement ways to deliver
better, faster and more cost-effective service to our
customers.”
Darbee said the Corporation plans to use its strong
cash flows to make new investments in the core utility
business, pay dividends and repurchase stock.
In 2005, dividends and stock repurchases are expected
to total $2.0 billion, he said. Shareholders recently
received a quarterly dividend payment of $0.30 per
share, the first dividend since the fourth quarter
of 2000.
Darbee said the Corporation sees room to grow dividends
as earnings from operations increase over time. “We
intend to maintain a dividend payout ratio in the range
of 50 percent to 70 percent of earnings per share from
operations,” Darbee said. He said dividends are
anticipated to rise “not in lock step, but somewhat
proportionately” with increasing earnings from
operations.
Smith said Pacific Gas and Electric Company’s
strong cash flows are also providing capital for investments
in replacing and upgrading infrastructure, and investing
in new technologies, in order to better serve customers.
As examples, he cited potential investments in new
electric generation and an initiative to install 9
million new high-tech electric and gas meters that
would enable the company to read meters remotely and
identify and respond to outages more quickly, among
other benefits.
Johns stated that the company’s base-level
projections for capital expenditures in electric and
gas transmission and distribution, and electric generation
facilities, are expected to average approximately $2.0
billion per year for 2005 through 2009. Potential incremental
investments could add up to $2.0 billion over the 2005
through 2009 timeframe.
Based on this expected level of investment, Johns
said the Corporation expects Pacific Gas and Electric
Company’s rate base to grow between 4.5 percent
and 6.5 percent annually from 2005 through 2009.
As a result, he said, the Corporation continues to
expect earnings per share from operations to grow on
average between 4 percent and 6 percent annually through
2009.
Johns reaffirmed the Corporation’s previously
issued 2005 and 2006 guidance for earnings from operations.
Projections are based on the expectation that the utility
will earn its authorized return on equity of 11.22
percent, among other assumptions.
This press release contains forward-looking statements
regarding estimated earnings for 2005 and 2006 and
a projected growth rate for earnings per share from
operations through 2009, the targeted level of stock
repurchases and dividends in 2005 based on anticipated
cash flows, and future capital expenditures. 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. In addition
to the risk that the assumptions on which the statements
are based (including that the Utility earns an authorized
return on equity of 11.22 percent, and the issuance
of the second series of energy recovery bonds in late
2005) prove to be inaccurate, factors that could cause
actual results to differ materially from those contemplated
by the forward-looking statements include:
- The
timing and resolution of the pending appeals of
the CPUC’s approval of the settlement agreement
and the bankruptcy court confirmation of the Utility’s
plan of reorganization;
- Unanticipated
changes in operating expenses or capital expenditures,
which may affect the Utility’s
ability to earn its authorized rate of return;
- The
level and volatility of wholesale electricity and
natural gas prices and supplies, the Utility’s
ability to manage and respond to the levels and volatility
successfully, and the extent to which the Utility
is able to timely recover increased costs related
to such volatility;
- The
operation of the Utility’s
Diablo Canyon nuclear power plant, which exposes
the Utility to potentially significant environmental
costs and capital expenditure outlays;
- The impact of current and future ratemaking actions
of the CPUC, including the risk of material differences
between forecasted costs used to determine rates
and actual costs incurred;
- Whether
the assumptions and forecasts underlying the Utility’s CPUC-approved long-term electricity
procurement plan prove to be accurate, the terms
and conditions of the generation or procurement commitments
the Utility enters into in connection with its plan,
the extent to which the Utility is able to recover
the costs it incurs in connection with these commitments,
and the extent to which a failure to perform by any
of the counterparties to the Utility’s electricity
purchase contracts or the Department of Water Resources’ contracts
allocated to the Utility’s customers affects
the Utility’s ability to meet its obligations
or to recover its costs;
- The
extent to which the CPUC or the FERC delays or
denies recovery of the Utility’s costs,
including electricity purchase costs, from customers
due to a regulatory determination that such costs
were not reasonable or prudent or for other reasons
resulting in write-offs of regulatory balancing accounts;
- How
the CPUC administers the capital structure, stand-alone
dividend and first priority conditions of the CPUC’s
decisions permitting the establishment of holding
companies for the California investor-owned electric
utilities;
- The impact of future legislative or regulatory
actions or policies;
- Increased competition;
- The outcome of pending litigation; and
- Other
factors discussed in PG&E Corporation's
SEC reports.