- PG&E Corporation's consolidated net income
for the second quarter of 2003 was $0.56 per share,
compared with $0.59 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 $0.31 per share, compared with $0.56 per share
for the same quarter last year.
- Pacific Gas and Electric Company's earnings from
operations, without headroom, were $0.32 per share,
compared with $0.54 per share for the same quarter
- PG&E National Energy Group recorded a total
net loss of $0.25 per share compared with a total
net loss of $0.65 per share for the same quarter
- Guidance for 2003 earnings from operations is
reaffirmed at $1.90-$2.00 per share, for the Corporation
and Pacific Gas and Electric Company. Guidance for
2004 earnings from operations is initiated at $2.00
- $2.10 per share.
Quarter Consolidated Income Statement
(San Francisco) -- PG&E Corporation (NYSE: PCG)
earned $227 million, or $0.56 per share, in consolidated
net income for the second quarter of 2003, compared
with consolidated net income of $218 million, or $0.59
per share, for the second quarter of 2002.
Second-quarter 2003 consolidated earnings from operations
for PG&E Corporation and its California utility
business, Pacific Gas and Electric Company, were $127
million, or $0.31 per share, compared with $207 million,
or $0.56 per share for the second quarter last year.
"PG&E Corporation delivered earnings from
operations in line with the company's expectations
for the second quarter," said Robert D. Glynn,
Jr., PG&E Corporation
Chairman of the Board, CEO and President. "The
Corporation's objectives for the remainder of 2003
are to continue operating the Pacific Gas and Electric
business well, to deliver earnings from operations
in line with our reaffirmed 2003 guidance, and to
keep the proposed settlement agreement on schedule.
is on track and on schedule to achieve these objectives."
PG&E Corporation's consolidated earnings from
operations do not include results from NEG. 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
Income from headroom (the difference between generation-related
costs and generation-related revenues) was a positive
$321 million, or $0.78 per share, for the quarter
compared with $366 million, or $0.99 per share, in
the second quarter of 2002. Total headroom for the
first two quarters of 2003 was a positive $140 million,
or $0.37 per share, in line with the company's expectations.
Items impacting comparability at the Corporation
and Pacific Gas and Electric Company included incremental
interest costs of $73 million, or $0.18 per share;
Chapter 11 costs and costs related to the California
energy crisis of $31 million, or $0.07 per share,
generally consisting of external legal and financial
advisory fees; and charges of $14 million, or $0.03
per share, associated with prior year impacts of a
revised decision related to the utility's 1999 General
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 second quarter of 2003, accounting for stock
options as an expense would have reduced earnings
by $0.01 per share.
PACIFIC GAS AND ELECTRIC COMPANY
Pacific Gas and Electric Company, contributed $130
million, or $0.32 per share, to earnings from operations
for the quarter, compared with $201 million, or $0.54
per share, for the same quarter last year.
As expected, the difference between second quarter
2003 and second quarter 2002 operating earnings per
share at Pacific Gas and Electric Company reflected
the following: the absence of a 2003 General Rate
Case revenue increase to offset additional expenses
associated with rate base growth, inflation, benefits
and other costs; lower gas transmission revenues,
as increased hydroelectric production reduced the
demand for some gas-fired generation; and an increase
in the average number of common shares outstanding.
A final 2003 GRC decision is expected early next year.
Revenues from the GRC will be retroactive for 2003.
Operational performance in Pacific Gas and Electric
Company's businesses remained solid. The utility continued
to receive high marks from customers responding to
service surveys, with nine out of 10 respondents rating
the quality of the service they received as good,
very good or excellent.
During the quarter, Pacific Gas and Electric Company
was also among the joint recipients of the 2003
ENERGY STAR® award for Regional, State and Community
Leadership in Energy Efficiency, and the 2003 ENERGY
of the Year for New Homes award. The awards were
given by the U.S. Environmental Protection Agency
and the U.S. Department of Energy in recognition
of the utility's strong contributions to California's
efforts to reduce energy use.
PG&E NATIONAL ENERGY GROUP
PG&E Corporation's national wholesale energy
business, PG&E National Energy Group, recorded
a total net loss of $103 million, or $0.25 per share,
after intercompany eliminations, for the second quarter
of this year, compared with net loss of $241 million,
or $0.65 per share, for the same quarter last year.
As previously reported, NEG has been reviewing its
second quarter presentation methods for netting certain
trading and hedging revenues and expenses. NEG has
adopted a net presentation approach for such transactions
and has reflected this change in its second quarter
results. For prior periods, the NEG continues to review
this matter, which generally arises as the result
of changes made in 2002 to the presentation of trading
and hedging revenues and expenses to reflect the netting
of certain trading activities and the reclassification
of discontinued operations. Any changes that may result
from this continued review are not expected to affect
the Corporation's operating income, net income, balance
sheets or cash flow statements.
NEG and certain of its subsidiaries have filed for
Chapter 11 protection in federal bankruptcy court.
NEG filed a proposed plan of reorganization with the
court that, if implemented would eliminate PG&E
Corporation's equity interest in NEG.
For the period after July 8, 2003—the date of NEG's
Chapter 11 filing—PG&E Corporation will no longer
report NEG results on a consolidated basis and will
use the cost method of accounting for its investment
in NEG, in accordance with accounting rules.
PROPOSED SETTLEMENT AGREEMENT
On June 19, 2003, Pacific Gas and Electric Company
and PG&E Corporation announced a proposed settlement
agreement with the staff of the California Public
Utilities Commission (CPUC) to resolve Pacific Gas
and Electric Company's Chapter 11 case. The proposed
settlement agreement was developed through a judicially
supervised settlement conference with the CPUC staff
and would resolve the differences between the competing
plans of reorganization put forth by the company and
the CPUC. The proposed settlement agreement calls
for a new plan of reorganization under which Pacific
Gas and Electric Company would aim to pay creditors
and emerge from Chapter 11 by the end of the first
quarter of 2004.
The new plan of reorganization, based on the terms
of the proposed settlement agreement, has the support
of the Official Committee of Unsecured Creditors.
On August 15, 2003, the plan and disclosure statement
were sent to creditors entitled to vote on the new
plan. A proceeding is also under way at the CPUC to
consider the proposed settlement agreement and allow
for public comment. It is currently expected that
the CPUC will vote on the proposed settlement agreement
on December 18, 2003.
"PG&E Corporation believes the proposed
settlement agreement and new plan provide the quickest
way to resolve Pacific Gas and Electric Company's
Chapter 11 case in a manner that is fair to our
customers and our company," said Glynn. "The
agreement's approval and implementation of the new
plan will allow Pacific Gas and Electric Company
to emerge from Chapter 11 as an investment grade
utility, pay in full or otherwise fully satisfy
all valid creditor claims, and do so while providing
for a reduction in customers' rates."
GUIDANCE FOR 2003 AND 2004 EARNINGS FROM
Reaffirming its previously issued earnings guidance,
the Corporation expects 2003 earnings from operations
for PG&E Corporation and Pacific Gas and Electric
Company will be in the range of $1.90-$2.00 per share,
not including headroom. For 2004, earnings from operations
is expected to be in the range of $2.00 to $2.10 per
Guidance estimates reflect forecasted consolidated
results for PG&E Corporation and Pacific Gas and
Electric Company; guidance does not include NEG. Among
the assumptions on which current guidance is based
is the expectation that Pacific Gas and Electric Company
receives a timely decision on its 2003 General Rate
Case, and that the GRC decision is sufficient to allow
the utility to recover increased costs due to inflation,
customer growth and ratebase growth. (A discussion
of the basis for guidance will be included in today's
earnings conference call.)
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 ranges 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.
call with the financial community will be held
today at 8:30 a.m. Pacific time to discuss PG&E
Corporations 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) 690-2091, and also will
be available on our website. International callers
will be able to access the replay by dialing (402)
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, but these
statements are necessarily subject to various risks
and uncertainties. Some of the factors that could
cause actual results to differ materially from those
contemplated by the forward-looking statements include: