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PG&E Profit Rises Slightly

The energy firm attributes the improvement to a smaller loss at its San Francisco utility.

August 20, 2003|Nancy Rivera Brooks | Times Staff Writer

PG&E Corp., whose two main subsidiaries are operating under Bankruptcy Court protection, reported slightly higher second-quarter earnings Tuesday because of a smaller loss at its ailing wholesale power unit.

PG&E said it still expected to hit its earnings target for the year of $1.90 to $2 a share even though its San Francisco utility subsidiary, Pacific Gas & Electric Co., reported lower income for the quarter.

For the quarter ended June 30, PG&E posted net income of $227 million, up 4% from the $218 million earned in the second quarter of last year. Per-share income dipped to 56 cents from 59 cents, because the company had more shares outstanding in the most recent quarter.

Revenue was little changed at $2.9 billion.

PG&E Chief Executive Robert D. Glynn Jr. said the company made significant progress in addressing problems since the second quarter began. He said the utility was expected to emerge from bankruptcy protection early next year if the California Public Utilities Commission and the U.S. Bankruptcy Court approved a settlement negotiated by PUC staff.

PG&E also has taken steps to shield itself from the bankruptcy filing of PG&E National Energy Group Inc., a subsidiary that builds power plants and trades energy. It entered Chapter 11 proceedings in July.

"There's now a clearer path for greater stability in our outlook," Glynn said during a conference call.

The financial news sent PG&E's stock 16 cents higher to close at $21.63 on the New York Stock Exchange.

"There were no surprises," said Michael Worms of investment firm Harris Nesbitt Gerard, who rates PG&E's stock as "outperform" and doesn't own any. "They're pretty much on track to deliver on their promises to investors."

Excluding one-time items, second-quarter earnings from continuing operations for PG&E and Pacific Gas & Electric fell to $127 million, or 31 cents a share, from $207 million, or 56 cents. PG&E excluded earnings of National Energy Group and is severing ties with the Bethesda, Md., subsidiary.

Pacific Gas & Electric contributed $130 million to operations, compared with $201 million in the second quarter of last year. PG&E said that difference should be made up in a future quarter if the PUC approves a request for a rate increase to offset higher expenses this year.

PG&E National Energy Group reported a loss of $103 million from $241 million in the year-ago quarter, when it began recording huge charges as its business deteriorated.

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