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PG&E Unit Reclassifies Some Costs and Sales

June 28, 2003|From Bloomberg News

PG&E Corp.'s National Energy Group, an electricity producer, is correcting an accounting error by reclassifying about $470 million of revenue from energy transactions and some expenses from a unit it is selling.

The reclassification won't change the group's operating income, net income, balance sheet or cash flow, PG&E, the owner of California's biggest utility, said in a statement. An increase in operating revenue will offset an equal increase in costs, the statement said.

The group's unit, USGen New England, owns and runs power plants and hydroelectric dams in the Northeast.

Power sales to National Energy from USGen and fuel sales to the New England unit from the group were misclassified as discontinued operations in the corporation's 2002 annual report, spokesman Greg Pruett said.

National Energy, based in Bethesda, Md., has been negotiating with creditors to avoid bankruptcy.

It defaulted on $2.44 billion of loans and bonds in November after missing a $431-million payment to banks. Income from its power-trading business fell after electricity prices dropped last year.

San Francisco-based PG&E, parent of Pacific Gas & Electric, reached a settlement with California regulators last week to emerge from bankruptcy after racking up $13 billion in debt from buying power in wholesale markets during the state's energy crisis in 2000 and 2001.

Shares of PG&E fell 9 cents to $21.35 on the New York Stock Exchange. They have climbed 26% in the last year.

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