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February 25, 2005
ISSUED BY:   PG&E Corporation, 1-800-743-6397


(New York, NY) – In remarks to investors and analysts today, PG&E Corporation (NYSE: PCG) President and CEO Peter A. Darbee and other members of the company’s senior management detailed the company’s outlook for 2005 and beyond, including expectations for continued solid financial performance, new investment in its core utility business to better serve customers, and delivering value for customers and shareholders.

“PG&E Corporation’s financial strength and regulatory stability create an excellent platform for delivering value to customers and shareholders,” said Darbee. “The solid earnings growth and cash flows from our core business are enabling us to pay a regular common stock dividend, buy back substantial amounts of PG&E Corporation stock, and invest in new infrastructure that will drive better, faster and more cost-effective customer service.”

The company recently reaffirmed its 2005 guidance for earnings from operations in the range of $2.15 to $2.25 per share. Today, 2006 guidance for earnings from operations was issued at a range of $2.30 to $2.40 per share. Using the mid-point of its 2005 guidance range as a baseline, management also expects earnings per share from operations to grow on average between 4 percent and 6 percent annually through 2009. Projections are based on the expectation that the company will earn its authorized return on equity of 11.22 percent, among other assumptions.

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 with generally accepted accounting principles (GAAP).

Following this news release is information that reconciles estimated earnings per share from operations with estimated consolidated net income per share in accordance with GAAP.

Stock repurchases in 2005 are projected to be approximately $1.6 billion, depending on the amount of the issuance of the second series of energy recovery bonds expected to be completed in late 2005. More than $1 billion of the total repurchases for 2005 are expected to be initiated by early March through an accelerated share repurchase program.

The company also recently declared a quarterly common stock dividend of $0.30 per share, payable in April of this year. In total for 2005, the company expects to pay approximately $350 million to shareholders through dividends.

The company’s strong cash flows are also providing significant capital for investments in replacing and upgrading infrastructure in order to better serve customers. Base case projections for capital expenditures in electric transmission and distribution, gas transmission, and electric generation facilities are on average approximately $2.0 billion per year for 2005 through 2009. Potential incremental investments could be up to $2.0 billion over the 2005 through 2009 timeframe, depending on utility needs.

Operational changes aimed at better, faster and more cost-effective customer service are a major focus of the company. The company has launched an intensive, multi-year program to achieve these goals by ensuring it is utilizing industry-leading business processes and tools for its people to succeed.

“We are committed to simplifying PG&E’s work processes, investing in new technologies that allow for faster and more efficient service, and strengthening our focus on the customer,” said Darbee. “We intend to satisfy our customers with excellent service, which in turn further enhances our relations with regulators and our opportunities to earn a fair return for shareholders.” The company’s program to achieve these results will be a three- to five-year process, he said.

“Investors today have a clear line of sight into our financial outlook and strong regulatory environment,” said Darbee. “We believe PG&E Corporation represents a value opportunity, with solid growth potential against a backdrop of regulatory stability and controllable risk. We look forward to delivering value to shareholders and customers in 2005 and beyond.”

A webcast replay of the company’s investor conference and a copy of the presentation slides are available on the PG&E Corporation web site,

This press release and the attachment contain forward-looking statements regarding estimated earnings for 2005 and 2006 and a projected growth rate for earnings per share from operations through 2009, the targeted level of stock repurchases and dividends in 2005 based on anticipated cash flows, and future capital expenditures. 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. In addition to the risk that the assumptions on which the statements are based (including that the Utility earns an authorized return on equity of 11.22 percent, the timely implementation of an $1.05 billion accelerated share repurchase program, and the issuance of the second series of energy recovery bonds in late 2005) prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include:

  • The timing and resolution of the pending appeals of the CPUC’s approval of the settlement agreement and the bankruptcy court confirmation of the Utility’s plan of reorganization;

  • Unanticipated changes in operating expenses or capital expenditures, which may affect the Utility’s ability to earn its authorized rate of return;

  • The level and volatility of wholesale electricity and natural gas prices and supplies, the Utility’s ability to manage and respond to the levels and volatility successfully, and the extent to which the Utility is able to timely recover increased costs related to such volatility;

  • The operation of the Utility’s Diablo Canyon nuclear power plant, which exposes the Utility to potentially significant environmental costs and capital expenditure outlays;

  • The impact of current and future ratemaking actions of the CPUC, including the risk of material differences between forecasted costs used to determine rates and actual costs incurred;

  • Whether the assumptions and forecasts underlying the Utility’s CPUC-approved long-term electricity procurement plan prove to be accurate, the terms and conditions of the generation or procurement commitments the Utility enters into in connection with its plan, the extent to which the Utility is able to recover the costs it incurs in connection with these commitments, and the extent to which a failure to perform by any of the counterparties to the Utility’s electricity purchase contracts or the Department of Water Resources’ contracts allocated to the Utility’s customers affects the Utility’s ability to meet its obligations or to recover its costs;

  • The extent to which the CPUC or the FERC delays or denies recovery of the Utility’s costs, including electricity purchase costs, from customers due to a regulatory determination that such costs were not reasonable or prudent or for other reasons resulting in write-offs of regulatory balancing accounts;

  • How the CPUC administers the capital structure, stand-alone dividend and first priority conditions of the CPUC’s decisions permitting the establishment of holding companies for the California investor-owned electric utilities;

  • The impact of future legislative or regulatory actions or policies;

  • Increased competition;

  • The outcome of pending litigation; and

  • Other factors discussed in PG&E Corporation's SEC reports.
Year Ended
December 31, 2005
EPS Guidance on an Earnings from Operations Basis $
Estimated Items Impacting Comparability (1)          
    Incremental interest expense (2)  
EPS Guidance on a GAAP Basis $
(1) The range of potential outcomes is developed using a range of dollar estimates and a range of estimated shares outstanding for the items presented.

(2) The net interest expense, after-tax, related to remaining generator disputed claims in the Utility’s Chapter 11 proceeding, which are subject to resolution by bankruptcy court.

Year Ended
December 31, 2006
EPS Guidance on an Earnings from Operations Basis $
Estimated Items Impacting Comparability  
EPS Guidance on a GAAP Basis $