Expenses for PG&E; Woes Still Mounting
PG&E; Corp. and its electricity utility spent $9 million after taxes on legal and other expenses during the second quarter to steer Pacific Gas & Electric through its bankruptcy case, PG&E; said Thursday in a filing with the Securities and Exchange Commission.
Bankruptcy experts have estimated that total court-approved fees could top $470 million for payments to armies of lawyers, accountants, investment bankers and others advising the utility, its parent company and the utility’s creditors during the course of Pacific Gas & Electric’s Chapter 11 bankruptcy proceeding.
Faced with $9 billion in electricity debts and stalled negotiations with the state on a settlement, the San Francisco-based utility sought protection from its creditors in a filing with the Bankruptcy Court on April 6.
It must file a plan of reorganization--a road map of how it will pay its debts--by Dec. 6. PG&E; and its utility’s unregulated sister companies are not included in the bankruptcy case.
For the six months ended June 30, PG&E; and its utility spent $25 million after taxes on professional fees and expenses related to the bankruptcy. The $16 million spent in the first quarter reflects the enormous task of preparing for the third-largest bankruptcy filing in U.S. history and the largest by a utility.
Because it is not paying some bills, PG&E; has accumulated significant cash in the last six months. Cash and cash equivalents totaled $3.76 billion as of June 30, compared with $1.6 billion Dec. 31. As a result, PG&E; earned an extra $32 million in interest income on the cash.
PG&E; said its own $272 million in cash and short-term investments “will be adequate to maintain its operations through and beyond 2001. In addition, PG&E; believes that itself and its subsidiaries not subject to [California Public Utilities Commission] regulation are substantially protected from the continuing liquidity and other financial difficulties of the utility.”
PG&E; on Wednesday reported second-quarter operating income of $243 million, or 67 cents a share, down from $243 million, or 69 cents a share in the same period last year.
But net income leaped to $750 million for the quarter because of one-time gains from payments made by electricity generators who terminated power contracts with the utility in January when PG&E;’s credit rating was cut to junk status and the generators feared they would not be paid. In addition, the quarter reflected a gain from lower-than-expected electricity costs for March charged by the state grid operator.
