Company Sees Average Annual EPS Growth at 8 Percent for
2007-2011
(San Francisco) – PG&E Corporation (NYSE:
PCG) will host a meeting for members of the financial
community on Wednesday, April 4, 2007 in New York City.
Chairman, CEO and President Peter Darbee and other
members of senior management will discuss PG&E
Corporation’s business and strategic focus, the
capital spending plans of its utility subsidiary, Pacific
Gas and Electric Company, and PG&E Corporation’s
multi-year financial outlook for 2007-2011.
During the April 4 analyst meeting, the company will
discuss:
- 2007 guidance for earnings per share (EPS)
from operations*, which is targeted at $2.70-$2.80.
- 2008 guidance for EPS from operations, which is
targeted at $2.90-$3.00.
- Its target for average annual growth in EPS from
operations of 8 percent for 2007-2011.
- The continued commitment to improve the utility’s
operations and customer service through its business
transformation effort. This effort is expected to result
in net benefits for the utility as early as 2008, including
annual pre-tax expense reductions and annual capital
expenditure savings. Annual pre-tax expense reductions
are projected to approach an approximate range of $175
million to $275 million in 2011 and annual capital
expenditure savings are projected to approach an approximate range
of $175 million to $325 million in 2011.
- The company’s expectation that dividends
per share will grow during 2007-2011 at approximately
the same rate as EPS from operations.
- The utility’s plans for capital expenditures,
averaging $2.8 billion per year over 2007-2011, and
yielding 8 percent average annual growth in utility rate base.
PG&E Corporation’s financial outlook reflects
the substantial level of planned investment in the
utility’s energy infrastructure to meet the needs
of 15 million Californians. These investments include
expanding electric and gas distribution and transmission
systems, upgrading and replacing existing equipment
such as cables, transformers and electric generation
turbines, as well as bringing the latest technology
to customers by installing 10 million SmartMeterTM
devices at homes and businesses. In 2006, these investments
totaled approximately $2.4 billion, up from $1.9 billion
a year earlier.
This increased level of investment is consistent with
the business transformation that the utility began
two years ago, and a number of decisions reached by
the California Public Utilities Commission (CPUC) in
the past year that support capital investment to sustain
growth in California and improve existing service.
The analyst meeting will be available to the public
via webcast beginning at 8:30 a.m. ET on April 4, 2007
at:
http://www.pge-corp.com/investors/investor_info/presentations/index.shtml.
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 consolidated net income presented
in accordance with generally accepted accounting
principles (GAAP). See the financial table below
for a reconciliation of guidance on an earnings
from operations basis to guidance based on consolidated
net income in accordance with GAAP.
This press release contains
forward-looking statements regarding management’s guidance for PG&E
Corporation’s 2007 and 2008 EPS from operations,
targeted average annual growth in EPS from operations
over 2007-2011, projected capital expenditures and
rate base growth over 2007-2011, projected growth in
common stock dividends, and the level of expected future
savings to result from the implementation of business
transformation initiatives. These statements are based
on current expectations and various assumptions which
management believes are reasonable, including that
the Utility earns at least its authorized rate of return
on equity of 11.35 percent. These statements and assumptions
are necessarily subject to various risks and uncertainties,
the realization or resolution of which are outside
of management's control. Actual results may differ
materially. Factors that could cause actual results
to differ materially include:
- the Utility’s ability
to timely recover costs through rates;
- the outcome of regulatory proceedings, including
ratemaking proceedings pending at the CPUC and the
Federal Energy Regulatory Commission;
- the adequacy and price of electricity and natural
gas supplies, and the ability of the Utility to manage
and respond to the volatility of the electricity
and natural gas markets;
- the effect of weather,
storms, earthquakes, fires, floods, disease, other
natural disasters, explosions, accidents, mechanical
breakdowns, acts of terrorism, and other events
or hazards that could affect the Utility’s
facilities and operations, its customers and
third parties on which the Utility relies;
- the potential impacts
of climate change on the Utility’s electricity
and natural gas operations;
- changes in customer demand for electricity and
natural gas resulting from unanticipated population
growth or decline, general economic and financial market conditions,
changes in technology including the development of
alternative energy sources, or other reasons;
- operating performance
of the Utility’s Diablo
Canyon nuclear generating facilities
(Diablo Canyon), the occurrence of unplanned outages
at Diablo Canyon, or the temporary or permanent
cessation of operations at Diablo Canyon;
- the ability of the Utility to recognize benefits
from its initiatives to improve its business processes
and customer service;
- the ability of the Utility to timely complete
its planned capital investment projects;
- the impact of changes in federal or state laws,
or their interpretation, on energy policy and the
regulation of utilities and their holding companies;
- the impact of changing
wholesale electric or gas market rules, including
the California Independent System Operator’s
new rules to restructure the California wholesale
electricity market;
- how the CPUC administers
the conditions imposed on PG&E Corporation when it became the Utility’s
holding company;
- the extent to which PG&E
Corporation or the Utility incurs costs in connection
with pending litigation that are not recoverable
through rates, from third parties, or through insurance
recoveries;
- the ability of PG&E
Corporation and/or the Utility to access capital
markets and other sources of credit;
- the impact of environmental laws and regulations
and the costs of compliance and remediation; and
- the effect of municipalization, direct access,
community choice aggregation, or other forms of bypass.
PG&E Corporation Earnings per Common Share (EPS)
Guidance
2007 EPS Guidance
|
Low |
High |
EPS Guidance on an Earnings from Operations Basis |
$2.70 |
$2.80 |
Estimated Items Impacting Comparability |
$0.00 |
$0.00 |
EPS Guidance on a GAAP Basis |
$2.70 |
$2.80 |
2008 EPS Guidance
|
Low |
High |
EPS Guidance on an Earnings from Operations
Basis |
$2.90 |
$3.00 |
Estimated Items Impacting Comparability |
$0.00 |
$0.00 |
EPS Guidance on a GAAP Basis |
$2.90 |
$3.00 |