Gain in Utility Assets Boosts PG&E; to Profit

PG&E; Corp., owner of California’s largest utility, said Tuesday that first-quarter profit was $3.03 billion after the state approved an asset value increase, a year after the company posted a bankruptcy-related loss of $354 million.

Net income was $7.21 a share, in contrast to a loss of 93 cents a year earlier, San Francisco-based PG&E; said.

Revenue rose 28% to $2.72 billion from $2.13 billion a year earlier.

The California Public Utilities Commission in December approved increasing the value of PG&E;’s assets, including distribution lines and power plants, as part of the settlement under which the company’s utility unit, Pacific Gas & Electric Co., emerged last month from Chapter 11 proceedings. The utility filed for U.S. Bankruptcy Court protection in early 2001 after sustaining billions of dollars in losses during the California energy crisis.

“Those assets aren’t worth anything until the California Legislature passes a law that allows them to securitize it,” said Paul Fremont, an analyst at Jefferies & Co. who has a “buy” rating on PG&E; shares and owns none. “When they get the law passed, they can turn it into cash.”

In the next few weeks, California lawmakers are expected to draft legislation approving the company’s plan to securitize the assets, said Chris Warner, legal counsel for the utility.

PG&E; could then convert most of the assets to cash by the end of the year, which may allow the company to pay dividends in the second half of 2005, sooner than planned.

Excluding the one-time gain to account for the increase in assets of $2.95 billion, or $6.96 a share, PG&E; posted a profit of $175 million, or 41 cents a share, down from $172 million, or 45 cents, a year earlier. That met the average estimate of analysts surveyed by Thomson First Call.

Shares of PG&E;, which have risen 85% in the last year, gained 25 cents to $28.13 on the New York Stock Exchange.