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PCG » Topics » DISCUSSION:

These excerpts taken from the PCG 8-K filed May 4, 2005.

DISCUSSION:

1.  

Earnings from operations contributed by the Utility excludes items impacting comparability, as discussed below, totaling $8 million ($0.02 per common share) for the quarter ended March 31, 2005 and $2,886 million ($6.81 per common share) for the quarter ended March 31, 2004.  On a GAAP basis, the Utility earned $219 million for the three months ended March 31, 2005 and $3,066 million for the three months ended March 31, 2004.

     

2.   

Items impacting comparability for the quarter ending March 31, 2005 include the net effect of incremental interest costs of $8 million ($0.02 per common share), after-tax, related to remaining generator disputed claims in the Utility’s Chapter 11 proceeding, which are subject to resolution by bankruptcy court.

     

3.  

Items impacting comparability for the quarter ended March 31, 2004 include:
      

 

a.  

The Utility’s recognition of a gain of approximately $2,950 million ($6.96 per common share) related to the establishment of regulatory assets contemplated in the December 19, 2003 settlement agreement, or Settlement Agreement, entered into between the Utility, PG&E Corporation and the California Public Utilities Commission, or CPUC, to resolve the Utility’s Chapter 11 proceeding;

 

    

   

 

b.  

The net effect of incremental interest costs of $52 million ($0.12 per common share) from the increased amount and cost of debt resulting from the California energy crisis and the Utility’s Chapter 11 filing;

 

   

 

c.  

Increased costs of $4 million ($0.01 per common share) related to the Chapter 11 filings of the Utility and National Energy & Gas Transmission, Inc., or NEGT.  These costs generally consist of external legal consulting fees, financial advisory fees and other related costs and payments;

 

 

d.  

A change in the market value of non-cumulative dividend participation rights of $19 million ($0.05 per common share) related to the Holding Company’s $280 million of 9.5% Convertible Subordinated Notes; and

 

 

e.  

The Utility’s recognition of $17 million ($0.04 per common share) in charges related to obligations to invest in clean energy technology and donate land, included in the Settlement Agreement.

 

PG&E Corporation
      		 

Table 2: Earning Per Share from Operations,

 

First Quarter 2005 vs. First Quarter 2004

 

($/Share)

 

Q1 2004 EPS from Operations 1

$0.41 

Timing of 2003 GRC and attrition decision 2

0.15 

Higher equity earnings on rate base 3

0.03 

Fewer shares outstanding

0.02 

Miscellaneous items

      0.02 

 

0.22 

 

 

Lower earnings on the settlement regulatory asset 4

(0.04)

Increased estimate of environmental remediation

      (0.03)

 

(0.07)

 

 

Q1 2005 EPS from Operations 1

$0.56 

      

1    See Table 1 for a reconciliation of earnings per share, or EPS, from operations to EPS on a GAAP basis.

2    The CPUC issued a final decision in May 2004 that was retroactive to 2003.  As a result, first quarter earnings in 2004 did not include 2003 GRC and 2004 attrition revenues.

3   The Utility's equity ratio reached its authorized level of 52% in January 2005, compared to approximately 48% during the first quarter 2004.

4   The Utility earned a return on the settlement regulatory asset only through February 10, 2005 (when the energy recovery bonds were issued to refinance the settlement regulatory asset) as compared to a full quarter in 2004.


DISCUSSION:

1.  

Earnings from operations contributed by the Utility excludes items impacting comparability, as discussed below, totaling $8 million ($0.02 per common share) for the quarter ended March 31, 2005 and $2,886 million ($6.81 per common share) for the quarter ended March 31, 2004.  On a GAAP basis, the Utility earned $219 million for the three months ended March 31, 2005 and $3,066 million for the three months ended March 31, 2004.

   

2.

Items impacting comparability for the quarter ending March 31, 2005 include the net effect of incremental interest costs of $8 million ($0.02 per common share), after-tax, related to remaining generator disputed claims in the Utility’s Chapter 11 proceeding, which are subject to resolution by bankruptcy court.

    

3.

Items impacting comparability for the quarter ended March 31, 2004 include:

         

a.   

The Utility’s recognition of a gain of approximately $2,950 million ($6.96 per common share) related to the establishment of regulatory assets contemplated in the December 19, 2003 settlement agreement, or Settlement Agreement, entered into between the Utility, PG&E Corporation and the California Public Utilities Commission, or CPUC, to resolve the Utility's Chapter 11 proceeding;

     

b.   

The net effect of incremental interest costs of $52 million ($0.12 per common share) from the increased amount and cost of debt resulting from the California energy crisis and the Utility's Chapter 11 filing;

     
c.  

Increased costs of $4 million ($0.01 per common share) related to the Chapter 11 filings of the Utility and National Energy & Gas Transmission, Inc., or NEGT.  These costs generally consist of external legal consulting fees, financial advisory fees and other related costs and payments;

     
d.  

A change in the market value of non-cumulative dividend participation rights of $19 million ($0.05 per common share) related to the Holding Company’s $280 million of 9.5% Convertible Subordinated Notes; and

     
e.

The Utility's recognition of $17 million ($0.04 per common share) in charges related to obligations to invest in clean energy technology and donate land, included in the Settlement Agreement.

 

EXCERPTS ON THIS PAGE:

8-K (2 sections)
May 4, 2005

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