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PG&E posts loss on charge
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May 2, 2001: 10:52 a.m. ET
California's largest utility beats 1Q estimates before $1.1B charge
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NEW YORK (CNNfn) - PG&E Corp., the owner of California's largest utility that is in bankruptcy, Wednesday posted a first-quarter loss that included a $1.1 billion charge for unrecovered wholesale power costs related to the ongoing energy crisis there.
Excluding the charge, PG&E (PCG: unchanged at $9.00, Research, Estimates) reported income from operations of $243 million, or 67 cents a share for the quarter, down from $284 million, or 78 cents a share, a year earlier. That's ahead of the consensus forecast of 37 cents a share, according to two analysts polled by earnings tracker First Call.
Including the charge, PG&E reported a loss of $951 million, or $2.62 a share, compared with net income of $280 million, or 77 cents a share, a year earlier.
Operating revenue grew to $6.7 billion from $5 billion.
"We are disappointed that the California energy situation continues to have such a negative impact on our reported financial results," CEO Robert Glynn said. "Under Chapter 11, 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."
PG&E spent $1.1 billion to buy wholesale power in the quarter, which it has been unable to recover because of an ongoing energy crunch that has gripped California.
California businesses and residents have been dealing with periodic power blackouts and brownouts since March as PG&E and other utilities have been unable to buy enough power to keep the state running without interruption.
The crisis had been building for years as wholesale power prices skyrocketed in the wake of the deregulation of the energy industry. Though it cost utility companies more to buy power, California regulations prohibited them from increasing rates to recover the costs.
The state finally agreed to permit a rate hike, but PG&E's electric utility still filed for Chapter 11 bankruptcy protection from creditors, and a series of blackouts and brownouts swept across the state. In Chapter 11, a company is protected from creditors as it seeks to restructure and repay its debts.
"We are focused on resolving the challenges associated with the California energy crisis fairly and equitably for all parties, including creditors, shareholders and customers," Glynn said. "The federal court is the best venue for us in which to pursue this objective. Like all the parties involved, we look forward to completing this process as quickly as possible."
On an operating basis, Pacific Gas & Electric Co. reported net income of $228 million, or 63 cents a share.
In addition to the $1.1 billion charge, PG&E incurred interest expense associated with financing all past un-reimbursed power costs.
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The PG&E National Energy Group, which supplies natural gas, reported operating earnings of $54 million, or 15 cents a share, compared with $56 million, or 15 cents a share, a year earlier.
The division continues with plans to expand its pipeline by an additional 200 million cubic feet per day, which would bring total capacity to 2.9 billion cubic feet per day, the company said. 
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