Rate increase lifts PG&E; profit 34%

PG&E; Corp. said fourth-quarter profit rose 34% after its Pacific Gas & Electric utility, California’s largest, won a rate increase to cover costs for investments in its power system.

Net income rose to $203 million, or 56 cents a share, from $152 million, or 43 cents, a year earlier, the San Francisco-based company said Friday. The results matched the average of analyst estimates compiled by Bloomberg.

Pacific Gas last March won a 2007 rate increase of $213 million to recover costs for its investments from its customers. California utilities are spending more on electricity generators and power lines to improve reliability and meet rising demand from a growing population.

Power sales by the utility rose 2.1% in the fourth quarter to 20.8 billion kilowatt-hours, PG&E; said.

Gas sales fell 3.2% to 214 billion cubic feet.

Shares of PG&E; rose 13 cents to $39.30 after the earnings report.

Pacific Gas, which provides power to about 5.1 million homes and businesses and natural gas to 4.3 million, plans to spend $3.6 billion on plants and equipment this year, up from $2.8 billion in 2007, according to a filing Friday with the Securities and Exchange Commission.

The year-earlier results included $18 million in employee severance costs for expected job cuts and restructuring.