EDITORS: Please do not use "Pacific Gas
and Electric" or "PG&E" when referring to PG&E
Corporation or its National Energy Group. The PG&E National
Energy Group is not the same company as Pacific Gas and Electric
Company, the utility, and is not regulated by the California Public
Utilities Commission. Customers of Pacific Gas and Electric Company
do not have to buy products or services from the National Energy
Group in order to continue to receive quality regulated services
from Pacific Gas and Electric Company.
CORPORATION REPORTS THIRD QUARTER FINANCIAL RESULTS
PG&E Corporation posted
net income from operations of $256 million, or $.70 per diluted
share, compared with $248 million, or $0.68 per diluted share,
for the same quarter last year.
Pacific Gas and Electric
Company contributed operating income of $192 million, or $0.53
per diluted share, compared with $211 million, or $0.58 per
diluted share, last year.
PG&E National Energy
Group grew operating results to $77 million, or $0.21 per diluted
share, for the quarter, compared with $37 million, or $0.10
per diluted share, in the third quarter of 2000.
Quarter Consolidated Income Statement
(San Francisco) -- PG&E
Corporation (NYSE: PCG) today reported third-quarter net income
from operations of $256 million, or $0.70 per diluted share, compared
with $248 million, or $0.68 per diluted share, for the same quarter
"The Corporation's results
for the third quarter continue to reflect solid underlying performance
across our operations," said PG&E Corporation Chairman, CEO and
President Robert D. Glynn, Jr.
Total reported net income
for the quarter was $771 million, compared with $225 million for
the third quarter of 2000.
Income from operations at
Pacific Gas and Electric Company, the Corporation's utility business,
was $192 million, or $0.53 per diluted share, compared with $211
million, or $0.58 per diluted share, last year. The decrease in
operating income from a year ago primarily reflects the effects
of a recent California Public Utilities Commission (CPUC) action
to retroactively reduce revenues previously authorized in the utility's
1999 General Rate Case. Specifically, for the years 1999 through
2001, the commission retroactively reduced the revenues the utility
was entitled to collect for such areas as meter reading, customer
account services and emergency response services. The 2001 effects
of this decision are included in operating results, with the 1999
and 2000 effects accounted for as items impacting comparability
and reflected in total net income. The company intends to challenge
the ruling in the courts.
At the PG&E National Energy
Group (PG&E NEG), income from operations grew to $77 million, or
$0.21 per diluted share, for the third quarter, compared with $37
million, or $0.10 per diluted share, in the third quarter of 2000.
Total Net Income
PG&E Corporation reported
total net income of $771 million, or $2.12 per diluted share, compared
with $225 million, or $0.62 per diluted share, for the same quarter
of 2000. This increase reflects the difference between generation
revenues and generation costs at Pacific Gas and Electric Company
in the third quarter of 2001.
Previously, in keeping with
CPUC requirements, these revenues were used to amortize generation-related
transition costs associated with energy industry restructuring.
However, in the fourth quarter of 2000, accounting rules forced
the company to write off the balance of these unrecovered transition
costs. Since the second quarter of 2001, the company's revenues
have enabled it to offset a portion of these previously written-off
As noted, total net income
also includes the 1999 and 2000 impacts of the CPUC's recent retroactive
General Rate Case decision, as well as several other items related
to the California energy crisis. Specifically, these items are $66
million, or $0.18 per share, of costs associated with the termination
of gas transportation hedges at the utility; $62 million, or $0.17
per share, of additional interest costs; $25 million, or $0.07 per
share, of other costs associated with Pacific Gas and Electric Company's
Chapter 11 case; and a gain of $0.02 per share related to the state
income tax effect of the generation-related revenues mentioned above.
At Pacific Gas And Electric Company
In September, Pacific Gas
and Electric Company and PG&E Corporation announced a plan to reorganize
and refinance the utility's operations in order to resolve creditors'
claims in the utility's Chapter 11 case. The Plan of Reorganization
filed in the Bankruptcy Court will enable the company to emerge
from Chapter 11 without asking the court to raise rates or seeking
a state bailout. Instead, the company will restructure its operations
to create the capacity for new financing to pay creditors' claims.
The company is on track to make a series of necessary federal regulatory
filings in late November seeking approvals to transfer certain assets
and operating licenses in order to implement the plan by the end
"Pacific Gas and Electric
Company continued to successfully manage the financial and operational
challenges associated with the state's energy crisis," said Glynn.
"In addition to filing the Plan of Reorganization, our team again
delivered on its commitment to provide safe, reliable and responsive
gas and electric service to its customers, as it has throughout
In the third quarter alone,
the company's service representatives, meter readers, troublemen
and credit representatives completed over 600,000 field orders,
and maintained an on-time-appointment score of more than 97 percent,
compared with the company's target of 94 percent. Year-to-date,
the company's call centers have handled 14.6 million customer calls,
up more than 35 percent over volume from the previous year. The
company has also maintained solid customer satisfaction survey results,
with more than 90 percent of customers surveyed rating services
as good, very good or excellent.
On the energy conservation
front, the utility's Smarter Energy Line has answered 425,000 calls
year to date, more than double the number of calls from the previous
year. The utility also continued its successful energy efficiency
rebate programs, receiving and paying more than 73,000 customer
rebate applications for energy efficient appliances in the third
quarter, and also paying more than $7.7 million in instant in-store
rebates for energy efficient lighting purchases.
At PG&E National Energy Group
Among the highlights for
the quarter, the PG&E NEG completed a successful effort to establish
a $1.25 billion revolving credit facility that will provide working
capital and credit to finance the unit's growth plans.
In July, the NEG completed
the sale of its Otay Mesa Generating Project in San Diego County
to Calpine. Under the terms of the sale, Calpine will build, own
and operate the facility and PG&E National Energy Group will contract
for a portion of the output. Also, the Caledonia generating project
in Mississippi, with which the PG&E NEG has signed an 810-megawatt
tolling agreement, went into construction during the quarter.
In August, the PG&E NEG
broke ground on the 1,170-megawatt Covert generating project in
southwest Michigan, and in September it secured financing and began
construction on the 111-megawatt Plains End peaking facility near
Denver, Colorado. The PG&E NEG took also ownership of the 66-megawatt
Mountain View wind-generating facility in Southern California, which
will sell its power to the California Department of Water Resources
under a 10-year contract. In its natural gas transmission operations,
the PG&E NEG began construction on the expansion of its Pacific
Northwest natural gas pipeline.
"The team at the PG&E National
Energy Group continued its solid performance in the third quarter,
as it has throughout all of 2001," said Glynn.
During the quarter, the
PG&E NEG continued working to manage the indirect impacts of the
utility's Chapter 11 filing and to shape its strategy in light of
increasingly challenging market conditions.
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.
These include the Liberty Electric, Athens, Southhaven, La Paloma
and Harquahala generating projects. As a result, the PG&E NEG expects
construction to be completed on more than 5,400 megawatts, plus
almost another 2,200 megawatts from a number of tolling agreements.
Guidance And Conclusion
The Corporation is reaffirming
its previous estimates of total net income from operations in 2001.
Specifically, the company continues to expect that net income from
operations for the year will be in the range of $2.70 to $2.75 per
share. For 2002, the company announced it expects total net income
from operations to grow between 8-10 percent.
"We look forward to running
our business well, implementing our Plan of Reorganization, and
continuing to deliver strong and growing shareholder value," said
A conference call with
the financial community will be held today at 11:00 AM Pacific time
to discuss the company'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) 690-2090, and also will be available on our website. International
callers will be able to access the replay by dialing (402) 220-0651.
* Terms Used in This Release
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 contains
forward-looking statements about the 2001 and 2002 earnings per
share from operations that are necessarily subject to various risk
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 of the factors that may affect future results, some
of the factors that could cause future results to differ materially
include: the outcome of the Utility's regulatory proceedings; whether
and to what extent the Utility is determined to be responsible for
the Independent System Operator's charges billed to the Utility;
the extent to which the California Department of Water Resources'
revenue requirements is allocated to the Utility and the impact
such allocation may have on the Utility's financial condition and
results of operation; the pace of the Utility's Bankruptcy Court
proceedings and the effect of the Utility's bankruptcy on PG&E Corporation
and PG&E NEG; the regulatory, judicial, or legislative actions (including
ballot initiatives) that may be taken to meet future power needs
in California, mitigate the higher wholesale power prices, provide
refunds for prior power costs, or address the Utility's financial
condition; the extent to which the Utility's under-collected wholesale
power purchase costs may be collected from customers; 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; future market prices for electricity and
future fuel prices, which in part, are influenced by future weather
conditions, the availability of hydroelectric power, and the development
of competitive markets; the timing and amount of valuation of the
Utility's hydroelectric and other non-nuclear generation assets;
future operating performance at the Diablo Canyon Nuclear Power
Plant (Diablo Canyon), and the future ratemaking applicable to Diablo
Canyon; legislative or regulatory changes, including the pace and
extent of the ongoing restructuring of the electric and natural
gas industries across the United States; future sales levels, general
economic and financial market conditions; the extent to which the
current or planned generation, pipeline, and storage capacity development
projects of PG&E NEG are completed and the pace and cost of such
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, the failure
of equipment to perform as anticipated, or an inability to obtain
equipment or labor on acceptable terms; the extent and timing of
generating, pipeline, and storage capacity expansion and retirement
by others; illiquidity in the commodity energy market and PG&E NEG's
ability to provide the credit enhancements necessary to support
its trading activities; the extent to which unfavorable conditions
in the general economy, the energy markets or equity markets affect
PG&E NEG's ability to obtain capital for its planned development
projects and future acquisitions on acceptable terms while preserving
PG&E NEG's credit quality; restrictions imposed upon PG&E NEG under
certain term loans of PG&E Corporation; fluctuations in commodity
gas, natural gas liquids, and electric prices and the ability to
successfully manage such price fluctuations; the effect of compliance
with existing and future environmental laws, regulations, and policies,
the cost of which could be significant; and the outcome of pending