- Net income after dividends on preferred stock reported under GAAP was $388 million, or $1.02 per share.
- On a non-GAAP basis, earnings from operations were $315 million, or $0.83 per share.
- Guidance for earnings from operations is reaffirmed for 2009, 2010, and 2011.
Release and Selected Tables
(San Francisco) – PG&E Corporation’s (NYSE: PCG) net income after dividends on preferred stock (also called “income available for common shareholders”) was $388 million, or $1.02 per share, in the second quarter ended June 30, 2009, as reported in accordance with generally accepted accounting principles (GAAP). The second quarter included a $0.15 per share item relating to a tax refund and a $0.07 per share item relating to the recovery of costs incurred in prior years. On a non-GAAP basis, PG&E Corporation’s earnings from operations were $315 million, or $0.83 per share, in the second quarter of 2009. In the same period last year, net income after dividends on preferred stock and earnings from operations were both $293 million, or $0.80 per share.
The quarter-over-quarter increase in earnings from operations primarily reflects higher authorized revenues associated with additional capital investments in Pacific Gas and Electric Company’s (Utility) core infrastructure, partially offset by expenses for environmental remediation activities.
“We continue to focus on strengthening our operations, investing in our energy infrastructure, and providing excellent customer service,” said Peter A. Darbee, Chairman, CEO, and President of PG&E Corporation.
PG&E Corporation reaffirms its previous guidance for earnings from operations in the range of $3.15-$3.25 per share for 2009, $3.35-$3.50 per share for 2010, and $3.65-$3.85 per share for 2011.
Guidance is based on various assumptions, including that the Utility maintains a ratemaking capital structure of 52 percent equity and an authorized return on equity of 11.45 percent, while growing its asset base, earning incentive revenues for energy efficiency achievements, and realizing cost savings from operational changes and efficiencies in amounts consistent with ranges provided at the company’s February 2009 Investor Conference.
Guidance for 2009 excludes three items impacting comparability forecasted to total between $0.06 and $0.08 per share for the year. Two of these items - prior year tax refunds approved by the Internal Revenue Service, and the recovery of costs previously incurred in connection with California Public Utilities Commission (CPUC)-mandated efforts to determine the market value of the Utility’s hydroelectric generation facilities in 2000 and 2001 - have been recognized in the second quarter, as noted above. The third item consists of the Utility’s projected costs of accelerating natural gas system integrity surveys and associated maintenance work. When added to earnings per share guidance on an earnings from operations basis, the net effect of these items impacting comparability results in 2009 GAAP guidance of $3.21 to $3.33 per share.
PG&E Corporation discloses historical financial results and provides earnings per share guidance using “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 do not reflect the normal course of operations. Earnings from operations are not a substitute or alternative for net income after dividends on preferred stock presented in accordance with GAAP (see the accompanying financial tables for a reconciliation of results and guidance based on earnings from operations to results and guidance calculated in accordance with GAAP).
Supplemental Financial Information:
In addition to the financial information accompanying this release, an expanded package of supplemental financial and operational information for the quarter will be furnished to the Securities and Exchange Commission and also will be available shortly on PG&E Corporation’s website (www.pgecorp.com).
Conference Call with the Financial Community to Discuss Second Quarter Results:
Today’s call at 10:30 a.m. Eastern time is open to the public on a listen-only basis via webcast. Please visit www.pgecorp.com for more information and instructions for accessing the webcast. The call will be archived on the website. Also, a toll-free replay will be accessible shortly after the live call through 9:00 p.m. Eastern time, on August 12, 2009, by dialing 866-415-9493. International callers may dial 585-419-6446. For both domestic and international callers, a confirmation code 0805 will be required to access the replay.
This press release and the tables contain forward-looking statements regarding management’s guidance for PG&E Corporation’s 2009, 2010 and 2011 earnings per share from operations that are based on current expectations and various assumptions that management believes are reasonable. These statements and assumptions are necessarily subject to various risks and uncertainties, the realization or resolution of which may be 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 manage capital expenditures and its operating and maintenance expenses within authorized levels;
- the outcome of pending and future regulatory proceedings and whether the Utility is able to timely recover its costs through rates;
- 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, including the ability of the Utility and its counterparties to post or return collateral;
- the effect of weather, storms, earthquakes, floods, disease, other natural disasters, explosions, fires, accidents, mechanical breakdowns, disruption of information technology and computer systems, acts of terrorism, and other events or hazards on 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 businesses;
- 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 Power Plant (“Diablo Canyon”), the availability of nuclear fuel, the occurrence of unplanned outages at Diablo Canyon, or the temporary or permanent cessation of operations at Diablo Canyon;
- whether the Utility can maintain the cost savings that it has recognized from operating efficiencies that it has achieved and identify and successfully implement additional sustainable cost-saving measures;
- whether the Utility incurs substantial expense to improve the safety and reliability of its electric and natural gas systems;
- whether the Utility achieves the CPUC’s energy efficiency targets and recognizes any incentives that the Utility may earn in a timely manner;
- 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 impact of future Federal Energy Regulatory Commission-ordered changes that will be incorporated into the new day-ahead, hour-ahead, and real-time wholesale electricity markets established by the California Independent System Operator 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 and liabilities in connection with litigation that are not recoverable through rates, from insurance, or from other third parties;
- the ability of PG&E Corporation, the Utility, and counterparties to access capital markets and other sources of credit in a timely manner on acceptable terms;
- the impact of environmental laws and regulations and the costs of compliance and remediation;
- the effect of municipalization, direct access, community choice aggregation, or other forms of bypass;
- the outcome of federal or state tax audits and the impact of changes in federal or state tax laws, policies, or regulations; and
- other factors and risks discussed in PG&E Corporation’s and the Utility’s 2008 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.