- PG&E Corporation earned $7.21 per share in
consolidated net income in the first quarter of
2004, compared with a loss of $0.93 per share in
the same quarter of 2003. (All "per share" amounts
in this release are presented on a diluted basis.)
- The majority of reported consolidated net income
-- $6.96 per share -- reflects one-time, non-cash
entries resulting from the required accounting to
recognize two regulatory assets added to Pacific
Gas and Electric Company's balance sheet.
- Consolidated earnings from operations for PG&E
Corporation and Pacific Gas and Electric Company
for the quarter were $0.41 per share, compared with
$0.45 per share in the same quarter of 2003.
- Pacific Gas and Electric Company's first quarter
earnings from operations were $0.42 per share, compared
with $0.45 per share for the same quarter of 2003.
Consolidated Income Statement
(San Francisco) -- PG&E Corporation (NYSE: PCG)
reported $3.03 billion, or $7.21 per share, in consolidated
net income in the first quarter of 2004, compared
with a loss of $354 million, or $0.93 per share, in
the first quarter of 2003. The majority of the quarter's
consolidated net income reflects the one-time, non-cash
effect resulting from the required accounting to recognize
two regulatory assets added to Pacific Gas and Electric
Company's balance sheet, as the company indicated
in a news release last week.
On an earnings-from-operations basis, PG&E Corporation
and its California utility business, Pacific Gas and
Electric Company, earned $175 million, or $0.41 per
share in the first quarter, compared with $172 million,
or $0.45 per share in the first quarter last year.
"PG&E Corporation is on track to deliver financial
performance in line with our estimates for 2004,"
said Robert D. Glynn, Jr., PG&E Corporation Chairman,
CEO and President. "With a new period of regulatory
and financial stability, and a healthy utility as
our core business, PG&E Corporation is strongly
positioned to provide value to customers and shareholders."
PG&E Corporation's earnings from operations exclude
certain non-operating income and expenses, which are
included in the line item "Items Impacting Comparability"
on the attached financial tables that reconcile earnings
from operations with consolidated net income as reported
in accordance with generally accepted accounting principles
(GAAP). Also excluded from earnings from operations
are the prior results from National Energy & Gas
Transmission, Inc. (NEGT).
For the first quarter, items impacting comparability
at the Corporation and Pacific Gas and Electric Company
primarily included the accounting recognition for
two regulatory assets, with after-tax values of $2.21
billion and $740 million. The regulatory assets were
established in connection with the December 2003 settlement
agreement with the California Public Utilities Commission
(CPUC) to resolve the financial challenges created
by the energy crisis, when the company accumulated
approximately $11.8 billion in undercollected costs,
including costs incurred to buy power for customers.
In accordance with GAAP, the combined $2.95 billion
after-tax value of the regulatory assets, or $6.96
per share, is included in the company's total consolidated
net income, even though it does not reflect actual
cash received. Cash will be received over the life
of the regulatory assets, as they are amortized.
Additional items impacting comparability included
$17 million, or $0.04 per share, of costs associated
with obligations to invest in clean energy technology
and to donate land as required by the settlement agreement;
incremental interest costs of $52 million, or $0.11
per share; a negative change of $19 million in the
market value of the dividend participation rights
associated with the Corporation's $280 million principal
amount of 9.5 percent convertible subordinated notes;
and Chapter 11 costs of $4 million, or $0.01 per share,
generally consisting of external legal fees, financial
advisory fees and other related costs.
As disclosed in the Corporation's quarterly report
on Form 10-Q for the quarter, accounting for stock
options as an expense in the quarter would have reduced
earnings by $0.01 per share.
PACIFIC GAS AND ELECTRIC COMPANY
Pacific Gas and Electric Company contributed $180
million, or $0.42 per share, to earnings from operations
in the first quarter, compared with $171 million,
or $0.45 per share, in the first quarter of last year.
As advised last week, Pacific Gas and Electric Company
has not yet received a final decision by the CPUC
on the 2003 General Rate Case (GRC) or the utility's
application for an attrition revenue increase for
2004 to recover the costs of new investment in energy
infrastructure and inflation. Thus, earnings from
operations and consolidated net income do not yet
include the positive impacts of revenue increases
expected to be authorized when final decisions are
The negative impact to earnings of the delay of the
GRC decision was offset by the return on equity earned
on the $2.21 billion regulatory asset, as well as
higher electric transmission revenues.
GUIDANCE FOR 2004 EARNINGS FROM OPERATIONS
Reaffirming its previously issued earnings guidance,
the Corporation expects 2004 earnings from operations
for PG&E Corporation and Pacific Gas and Electric
Company to be in the range of $2.00-$2.10 per share.
Guidance estimates reflect forecasted results for
PG&E Corporation and Pacific Gas and Electric
Company; guidance does not include NEGT, since the
Corporation will retain no ownership interest once
NEGT's Chapter 11 case is completed. Guidance for
2004 is based on a number of assumptions, including
the assumption that the CPUC issues a final decision
on the utility's 2003 GRC and the requested 2004 attrition
adjustment that is consistent with the terms of the
GRC settlement agreement. The company anticipates
a final decision sometime in the second quarter. Guidance
also assumes that the after-tax value of the $2.21
billion regulatory asset is not materially reduced
by securitization or by generator settlements during
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
The attachment to this news release reconciles 2004
estimated earnings per share from operations with
estimated consolidated net income per share in accordance
call with the financial community will be held
today at 9:00 a.m. Eastern Standard Time to discuss
PG&E Corporation's results for the first quarter
of 2004. The call will be open to the public on a
listen-only basis via webcast. Please visit our website
at www.pgecorp.com for more information and instructions
for accessing the conference call webcast. The call
will be archived at www.pgecorp.com. Alternatively,
a toll-free replay of the conference call may be accessed
shortly after the live call through 9:00 p.m. EDT,
May 10, 2004, by dialing 877-690-2095. International
callers may dial 402-220-0650.
This press release and the attachment contain forward-looking
statements regarding estimated earnings for 2004.
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: