PG&E Posts Loss with $1.1B Charge
NEW YORK – PG&E Corp., owner of the big California utility that has filed for bankruptcy posted a first-quarter loss due to a $1.1 billion charge for wholesale power costs that have not been recovered.
Including the charge, PG&E posted a net loss of $951 million, or $2.62 per share.
PG&E's California unit, Pacific Gas and Electric Co., the state's largest electric utility, filed for bankruptcy last month after running up billions of dollars of debt because of the state's power crisis.
``We are focused on resolving the challenges associated with the California energy crisis fairly and equitably for all parties, including creditors, shareholders and customers,'' said PG&E Chairman and Chief Executive Robert Glynn Jr. ``The federal court is the best venue for us in which to pursue this objective.''
Edison International, which owns Southern California Edison, the state's No. 2 utility which also has been badly hurt by the power crisis, is still trying to work out a financial solution with state officials.
Pacific Gas and Electric has 13 million customers, while Southern California Edison has around 11 million, and together they have run up more than $14 billion in debt because of a crisis stemming from soaring wholesale electric prices and a failed deregulation plan.
Before the charge and other special items, San Francisco-based PG&E's income from operations in the first quarter was $243 million, or 67 cents per diluted share, down from $284 million, or 78 cents a diluted share, a year earlier.
Wall Street analysts had expected PG&E to earn 35 to 64 cents a share before unusual items, with a consensus estimate of 37 cents, according to market research firm Thomson Financial/First Call. However, only three analysts were included in the First Call survey amid uncertainty surrounding PG&E's financial position.
``While standard accounting rules required the utility to record a charge against earnings for unreimbursed wholesale and transition costs, taking this charge does not diminish our conviction that the utility is entitled under law to recover these costs, nor does it diminish our ongoing lawsuit in Federal District Court,'' Glynn said in a statement.
He said the company may later reverse the charges it is now required to record.
``We are disappointed that the California energy situation continues to have such a negative impact on our reported financial results,'' said Glynn. ``Under Chapter 11 (of the U.S. Bankruptcy Code), we are preparing our plan of reorganization so that we can obtain its approval, implement the plan, exit Chapter 11, and restore the shareholder value associated with our strong operating results.''
On an operating basis, Pacific Gas and Electric Co. contributed earnings of $192 million, or 53 cent a share, to overall PG&E first-quarter results. A year earlier the unit's operating earnings totaled $228 million, or 63 cents per diluted share.
PG&E said its total operating revenues rose to $6.68 billion in the first quarter from $5.01 billion a year ago.
PG&E reported its fourth-earnings in April after a delay in filing its annual report. At that time, it took a charge of $4.1 billion.
Shares of PG&E closed at $9 on Tuesday on the New York Stock Exchange, having lost nearly 38 percent of their value in the first quarter, underperforming the broader S&P 500 index, which fell 12 percent lower. The 40-company S&P utility index was down 7.71 percent in the quarter.