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 SECOND QUARTER FINANCIAL RESULTS
PG&E Corporation posted
net income from operations of $243 million, or $0.67 per share,
compared with $253 million, or $0.69 per share, for the same
quarter last year. Adjusting for non-operating items related
to the California energy crisis, the Corporation reported total
net income of $750 million, or $2.07 per share.
Pacific Gas and Electric
Company contributed operating income of $175 million, or $0.48
per share, compared with $216 million, or $0.59 per share, last
PG&E National Energy
Group grew operating results to $71 million, or $0.19 per share,
for the quarter, compared with $37 million, or $0.10 per share,
in the second quarter of 2000.
Second Quarter Earnings
(San Francisco) -- PG&E
Corporation (NYSE: PCG) today reported second-quarter net income
from operations of $243 million, or $0.67 per share, compared with
$253 million, or $0.69 per share, for the same quarter last year.
Total net income for the quarter was $750 million, reflecting the
impact of several non-operating items.
Income from operations at
Pacific Gas and Electric Company, the Corporation's utility business,
was $175 million, or $0.48 per share, compared with $216 million,
or $0.59 per share, last year. The lower operating results primarily
reflect the reduced capacity factor for Unit 2 at the company's
Diablo Canyon Nuclear Power Plant, which was off-line for 29 days
during the quarter for regularly scheduled refueling and maintenance
work, compared with no refueling outage in the second quarter of
Income from operations at
PG&E National Energy Group grew to $71 million, or $0.19 per share,
for the quarter, compared with $37 million, or $0.10 per share,
in the second quarter of 2000. The results reflected particularly
strong performance in the integrated energy and marketing segment
of the business. Performance was strong in the natural gas pipeline
segment in the Northwest as well.
"The Corporation's operating
results show that the underlying performance of our business remains
solid," said PG&E Corporation Chairman, CEO and President Robert
D. Glynn, Jr. "Pacific Gas and Electric is responding to the operational
demands of the energy crisis, and our National Energy Group is continuing
to grow its contribution to our bottom line."
Total Net Income
PG&E Corporation reported
total net income of $750 million, or $2.07 per share, compared with
$248 million, or $0.68 per share, for the same quarter of 2000.
The substantial increase over the same period from the prior year
is attributable to various non-operating items affecting results
for the quarter. Most significantly, as reported in a filing earlier
this week with the Securities and Exchange Commission, these include
$552 million in non-operating income offsetting a portion of the
charges previously recorded for unrecovered wholesale power and
transition costs at Pacific Gas and Electric Company.
The $552 million offset
primarily reflects the following two items:
Accounting for the value
of certain bilateral power contracts that were terminated by
the counterparties, who were entitled to do so in the event
of a decline in the utility's credit quality. The contracts
require that the market value of the contracts be settled upon
termination. The estimated value of the contracts is reflected
as a non-operating item.
Accounting for the actual
charges from the ISO for power the ISO purchased in March, which
were lower than the estimated amounts the company recorded in
the first quarter based on available information at the time.
The difference between the estimated charges and the actual
charges is reflected as a non-operating item for the second
quarter offsetting previously recorded power purchase costs.
Further, Pacific Gas
and Electric Company's second quarter results do not include any
ISO charges for purchases and related services after April 6, the
date on which the Federal Energy Regulatory Commission reaffirmed
its ruling that the ISO cannot bill non-creditworthy parties for
power purchases. The company continues to assert that it is not
responsible for ISO purchases made during the majority of the first
quarter. However, accounting rules required that the company estimate
and record those charges in its first quarter results, pending resolution
of the issue.
Even with the positive impact
of these offsets in the second quarter, however, the company estimates
that its net undercollection remains at approximately $4.7 billion
after tax, as a result of charges recorded in the fourth quarter
of 2000 and the first quarter of 2001.
Accomplishments At Pacific
Gas And Electric Company
The success of the refueling
outage at Diablo Canyon, which was the shortest in the facility's
history, was one of a number of operational accomplishments throughout
the utility during the quarter in preparation for the summer. These
other accomplishments included increasing customer energy efficiency
programs, and enhancing various systems and procedures related to
plan for and manage potential rotating outages. The utility also
worked with 10 generators to interconnect more than 1,000 additional
megawatts to the electric transmission grid this summer, and it
signed agreements with more than 130 QF power generators to lock
in power deliveries at fixed costs, helping to protect customers
against swings in wholesale market prices.
Accomplishments At PG&E
National Energy Group
In addition to strong earnings
performance, the PG&E NEG completed two important financings during
the second quarter. Specifically, the unit sold $1 billion of 10-year
notes in a private placement, and it obtained a new $550 million
senior letter of credit and revolving credit facility. The financings
will be used by the unit to invest in generating and pipeline assets,
and to support its energy trading activities and fund working capital
Second quarter accomplishments
also included further progress in developing and building the unit's
portfolio of controlled megawatts. Commercial operations began in
June at the 526-megawatt (MW) Attala power plant in Mississippi
and at the final unit of the 144-MW multi-unit peaking facility
in Ohio. Also in June, PG&E NEG began construction on the 1,080-MW
Athens plant in New York and the 111-MW Plains End facility in Colorado.
In addition, an agreement was announced in June between the PG&E
NEG and the city of Denton, Texas, under which the company acquired
a 178-MW generating facility and agreed to a power sales contract
with the city. The various projects grew the company's total electric
generation portfolio to approximately 7,000 MW in operation and
approximately 5,700 MW currently under construction.
In its natural gas pipeline
operations, during the second quarter the PG&E NEG completed two
open seasons for new capacity. The unit expects the open seasons
will lead to capacity expansions and extensions of its Northwest
"The earnings growth in
the PG&E National Energy Group and its success in securing new capital
show that this business is strong and on track with executing its
growth strategy," said Glynn.
Guidance And Conclusion
The Corporation reaffirmed
the guidance it provided in the first quarter regarding the outlook
for net income from operations in 2001. Specifically, the company
estimates net income from operations for the year will be in the
range of $2.70 to $2.75 per share. "Our performance in the second
quarter confirms that our business is continuing to perform while
we work to resolve the challenges in California," said Glynn.
A conference call with
the financial community will be held today at 9:00 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 also be available on our website.
The information in this
release includes forward-looking statements regarding the expected
financial results for the quarter ended June 30, 2001. These forward-looking
statements are subject to various risks 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 may differ materially from
those expressed or implied in the forward-looking statements as
a result of various factors, including the extent to which more
information is revealed about the recently released California Department
of Water Resources' revenue requirements and the impact such revenue
requirements may have on the Utility's financial condition and results
of operation; the outcome of the Utility's regulatory proceedings;
whether and to what extent the Utility is determined to be responsible
for the ISO's charges billed to the Utility; any regulatory, judicial,
or legislative actions 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; and the other risk factors discussed in PG&E Corporation's
reports filed with the Securities and Exchange Commission