("PG&E 2Q Net Up 32% On One-Time Gains; Fuel Costs Fall,"
published at 9:36 a.m. EDT and updated at 12:31 p.m. EDT,
misidentified operating margin as gross margin. The correct version
follows:)
PG&E Corp.'s (PCG) second-quarter earnings rose 32% on
one-time gains as costs and revenue fell, resulting in operating
returns just shy of Wall Street's average expectations.
California has seen unemployment rates rise above the national
average while home-foreclosure rates are among the nation's
highest. The utility, whose results are mostly decoupled from power
demand, has worked to stem unpaid bills.
Profit rose to $388 million, or $1.02 a share, from $293
million, or 80 cents a share, a year earlier. The latest quarter
included a net 19 cents in tax- and divestiture-related gains.
Revenue fell 11% to $3.19 billion amid lower natural-gas
prices.
Analysts polled by Thomson Reuters most recently were expecting
earnings, excluding items, of 84 cents a share on revenue of $3.51
billion.
Operating margin rose to 20.5% from 16.3% on slumping fuel
costs.
As for financing, executives said during a conference call with
investors Wednesday that PG&E doesn't expect to make a major
equity issuance through 2010. It also may pull back on smaller,
ongoing equity issuance programs to limit the dilution of
shares.
The parent of California utility Pacific Gas & Electric has
been looking for ways to boost development of renewable energy to
meet government mandates. In July, Pacific Gas & Electric
signed a power purchase agreement with Sempra Energy's (SRE)
merchant-generation unit to take the power from a 48-megawatt solar
farm under development in Nevada. The project is expected to be
completed by 2011.
Executives during a conference call said the company remains
interested in partnering on renewable projects, purchasing projects
after they have been operating, or other options. However, they
said the utility doesn't have a master plan, instead looking on a
project-by-project basis.
PG&E also on Wednesday reaffirmed its earnings forecasts for
2009 through 2011. To meet its estimate for this year, the company
will need larger returns in the second half. Executives said the
increase would come from cost-cutting measures underway, increased
revenues from transmission line operations because of higher power
demand in the summer months, and reductions in uncollectible bills.
As for Pacific Gas & Electric's proposed rate increase,
executives said the utility continues to move forward even amid the
current recession. The new rates, if approved, would go into effect
in 2011.
"By that time, the economy would have turned around," said Peter
Darbee, chairman and chief executive of PG&E Corp.
Shares of PG&E recently traded down nearly 1% to $40.18.
-By Mark Peters and Mike Barris, Dow Jones Newswires;
212-416-2457; mark.peters@dowjones.com
