PG&E; Operating Earnings Higher in 2000 Despite Bad 4th Quarter
A bruising year in the electricity markets that led to the largest utility bankruptcy filing in U.S. history also produced a $4.12-billion net loss and a 52% decline in operating earnings for the fiscal fourth quarter at PG&E; Corp., the San Francisco-based company said late Monday.
Fiscal fourth-quarter results slightly lagged behind Wall Street expectations. But PG&E; Corp., and even its beleaguered Pacific Gas & Electric Co. utility arm, posted higher operating earnings for all of 2000 than in the relatively tranquil days of 1999.
Pacific Gas & Electric Co. on April 6 filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code, but its parent company and a profitable sister firm were not included. The utility said it turned to Bankruptcy Court to sort out its financial meltdown because it had given up on a solution from Gov. Gray Davis, the state Legislature and utility regulators.
“While overshadowed by the extraordinary impacts of the California energy crisis, we demonstrated continued solid performance on an operating basis,” said Chief Executive Robert D. Glynn Jr. in a statement issued Monday evening after the close of markets. “We are proud of that accomplishment, even as we are deeply dissatisfied at reporting a substantial net loss due to the uncertainty around the recovery of our wholesale power and transition costs.”
PG&E; Corp., as promised, took an after-tax charge of $4.1 billion, or $11.36 per share, for electricity debts that it could not make customers pay because of a retail rate freeze. The company, whose Pacific Gas & Electric arm is the state’s largest utility, said it did so because it could no longer be assured of recovering more than $6 billion it paid for wholesale electricity for its customers.
That write-off led to the fiscal fourth-quarter net loss of $4.12 billion, or $11.34 a share, and a net loss for the full year of $3.4 billion, or $9.29 per share. In 1999, PG&E; posted a net loss of $611 million for the fiscal fourth quarter and $73 million for the year.
“While standard accounting rules required the utility to record a charge against earnings for unreimbursed wholesale and transition costs, taking this charge does not diminish our conviction that the utility is entitled under law to recover these costs, nor does it diminish our ongoing lawsuit in federal District Court,” Glynn said.
Excluding one-time charges, PG&E; Corp. posted fourth-quarter operating earnings of $140 million, or 38 cents per share, compared with $294 million, or 80 cents per share, in the fourth quarter of 1999.
Wall Street had expected the company to earn 38 cents to 41 cents per share, with a consensus at 40 cents, according to the research firm First Call/Thomson Financial, which surveys market analysts.
Full-year operating earnings for 2000 rose to $925 million, or $2.54 per share, at PG&E; Corp. from $826 million, or $2.24 per share, in 1999. The big success story was the company’s National Energy Group, an unregulated subsidiary that builds power plants and trades in energy, which saw operating earnings for the year rise to $162 million from $63 million.
But even the utility managed to eke out slightly higher operating earnings for the year, $769 million versus $763 million for 1999.
Edison International will report its earnings today. The Rosemead company’s utility, Southern California Edison Co., said Monday that it had deferred quarterly dividends on three series of preferred stock that would have been payable May 31.
Separately, PG&E; revealed that Glynn took a pay cut in 2000 as his utility subsidiary lurched to the edge of bankruptcy and the parent company’s stock price withered.
Glynn’s salary last year was $900,000, up from $800,000 in 1999, but the 58-year-old executive received no bonus in 2000 after receiving $1.2 million in 1999, PG&E; said in its proxy statement filed Monday with the Securities and Exchange Commission.
Glynn, who also is chairman of PG&E; Corp. and the utility, received no payments in 2000 under a long-term incentive program, compared with about $176,000 in 1999. The company did pay bonuses of $300,000 or more to four executives of its profitable National Energy Group.
Several shareholder proposals were detailed in the filing, including plans to tie executive compensation more closely to stock performance.
The proposals will be voted on at the PG&E; annual meeting May 16 in San Francisco. Last year, the annual meeting was held in Boston and was poorly attended.
PG&E; released its earnings after the close of regular trading on the New York Stock Exchange. The company’s shares gained 19 cents on the day to close at $8.84. The stock, though above the 52-week closing low of $6.90 on April 9, is off 72% from a high of $31.65 set on Sept. 11.
