Bidders Line Up for PG&E;’s Sales, Consulting Business

PG&E; Corp. said it has received several bids for its PG&E; Energy Services unit, which may lead to a sale of the electricity sales and consulting business that has lost money for the last three years.

PG&E; is considering a sale of the unit to focus on building and buying power plants in states that deregulated electricity sales, as well as on trading and delivering natural gas, spokesman Greg Pruett said.

PG&E; Energy Services sells electricity and natural gas to large businesses and advises them on ways to reduce their energy costs. The unit has long-term sales contracts valued at more than $3 billion with such customers as International Business Machines Corp., McDonald’s Corp. and Safeway Inc. The business has been unprofitable because of high startup costs and narrow margins on electricity sales, analysts said.

“PG&E; has lost a ton of money on Energy Services, and it’s probably a good thing they get out of it,” said Michael Worms, a Gerard, Klauer Mattison analyst with a “hold” on PG&E; shares.

San Francisco-based PG&E;, owner of California’s largest utility, last month agreed to sell its money-losing Texas natural-gas business to El Paso Energy Corp. for $840 million. PG&E; said that sale would result in an $890 million charge against fourth-quarter earnings.

The company told analysts in December that the Energy Services unit would break-even this year for the first time, which Pruett said is still on track.

“The business has improved significantly,” Pruett said.

PG&E;’s shares fell 56 cents to $21.88 in regular U.S. trading.