PG&E; Sees Profit Rise, Predicts Dividend

PG&E; Corp. reported sharply higher second-quarter profit Tuesday, boosted by a favorable rate ruling from California regulators, and said it might pay a dividend again in the first half of next year.

San Francisco-based PG&E;, parent of utility Pacific Gas & Electric, reported second-quarter net income of $372 million, or 88 cents a share, up from $227 million, or 55 cents a share, in the same period a year earlier.

The period saw Pacific Gas & Electric, California’s largest utility, emerge from Chapter 11 bankruptcy protection in April. The following month, the company won a ruling from state regulators that settled a rate case and raised the revenue PG&E; receives for supplying electricity and natural gas to its customers.

That revenue ruling boosted earnings for the quarter by 30 cents a share, accounting for most of the increase in earnings over last year’s period.

PG&E; also said it was maintaining its earnings outlook of $2 to $2.10 a share for 2004 and forecast earnings of $2.10 to $2.20 a share for 2005.

Analyst Paul Fremont of Jefferies & Co. said the forecast might have contributed to a modest decline in the stock price.

“They are sticking pretty much to the base case outlined late last year. Many may have postulated the ability to exceed the base case,” Fremont said.

PG&E; shares fell 37 cents to $28.03 on the New York Stock Exchange.

PG&E; Chief Financial Officer Peter Darbee said during a conference call for analysts that the company might resume paying a dividend on its stock as soon as next year. The timing would depend on whether a plan to refinance a “regulatory asset” is approved.

That asset, valued at about $3.7 billion pretax and $2.21 billion after tax, is an accounting tool created with the backing of state regulators. It is designed to add equity to PG&E;’s balance sheet and help it recoup some of the funds lost during the 2000-01 California power crisis.

The company suspended dividend payments in January 2001.