East Bay Business Times, February 22, 2008
PG&E saw its fourth-quarter earnings rise sharply as it reaped gains from capital investments.
The company reported net income of $203 million, or 56 cents a share, compared with $152 million, or 43 cents a share, in the same quarter in 2006. The 2006 quarter included $18 million, or 5 cents a share, in severance costs from job cuts, the company said.
Net income for the full year year was $1 billion, or $2.78 per share, compared with $991 million, or $2.76 per share, in 2006. Total operating revenue for the year stood at $13 billion, up from $12.5 billion in 2006.
The company affirmed previous guidance that it will see 2008 earnings from operations in the $2.90 to $3.00 per share range and reaffirmed guidance for 2009 earnings from operations in the $3.15 to $3.25 per-share range.
Whether or not the company achieves that guidance and its target growth rate depends on its success in efforts to become more efficient and drive costs down, said Christopher Johns, senior vice president, chief financial officer and treasurer, on a conference call with analysts and investors. The company has just rolled out a major initiative to automate the scheduling and execution of field work. “Realizing the expected benefits from that release and other operational improvements is vital to reaching our 2008 forecast and 8 percent growth rate,” he said.
Even as the company tries to wring cost savings out of operations, it is facing the challenge of costs for materials, permitting and labor rising at a faster pace than the scenario it included in its general rate case before the California Public Utilities Commission, he added. “These rising costs and demands on our business increase the pressure on our initiatives to achieve greater operational efficiency.”
The company is looking to identify broader operations savings, and is conducting a full review of plans, operations and spending levels for 2008 through 2010.
Johns also noted that PG&E filed a petition with the CPUC on Feb. 21 that seeks to modify a September CPUC decision on a broad energy efficiency program that incentivizes utilities and their customers to become more energy efficient. PG&E wants assurance it will be able to recognize of portion of earnings from the incentives on an annual basis, rather than at the end of the three-year energy efficiency program cycle. A decision on the petition to modify could take several months.
On a conference call with analysts and investors, Peter Darbee, chairman, president and CEO, said the utility is determined to continue to move forward with a key goal of becoming an environmental leader.
So far this year, the company has signed contracts for 800 megawatts of new renewable energy resources, including the recently signed contracts with Calpine Corp. for 175 megawatts of geothermal energy, and its contract with EnXco for 150-megawatts of wind energy.
It has signed several big solar contracts, including an agreement to purchase over 500 megawatts of clean energy from a new solar power plant that will be built by Solel Solar Systems in the Mojave Desert. Over the next five years, PG&E expects to have a solar thermal portfolio of about 2,000 megawatts, which is the equivalent of the four new gas-fired plant the company is completing at its Gateway Station plant in Eastern Contra Costa County.
The company also raised its quarterly common stock dividend to $0.39 per share from $0.36 per share, beginning with the first quarter.
Shares of PG&E closed at $39.30, up 13 cents, or 0.33 percent.