With a corporate strategic goal of becoming the nation's leading utility, PG&E Corp. has no plans for mergers or acquisitions and will concentrate on creating new earnings opportunities within the regulated utility business, according to CEO Peter Darbee. He made the remarks Thursday on a conference call announcing earnings that were down for the fourth quarter last year, but increased for all of 2006, compared with 2005.
In its utility business, Pacific Gas and Electric Co. expects a decision next month from the California Public Utilities Commission (CPUC) on its general rate case that could accept a proposed settlement the utility has reached and in the second half of this year another settlement on its transmission/generation operations related to the Federal Energy Regulatory Commission (FERC) should also be resolved. The utility provides natural gas and electric service to approximately 15 million people throughout a 70,000-square-mile service area in northern and central California.
In response to a question, Darbee said the company has no plans to make any acquisitions. "We have identified great opportunities, inherent strategic growth that doesn't constitute mergers and acquisitions," he said, although he acknowledged that there is "some M&A activity" ongoing in the energy utility sector.
"As we have looked at the business, what we see is that there are a tremendous number of opportunities that relate to our core business and are an extension of that business [such as the proposed "Pacific Connector Project" to build an new natural gas transmission pipeline in Oregon that connects the coast to major interstate pipelines in the I-5 corridor] that might be pursued without merger or acquisition," Darbee said.
"In California we have focused on the fact that there are more plug-in hybrid vehicles in the state than almost all the other states combined, so one of the things we might do in terms of growing the core business would relate to plug-in hybrid vehicles. Things like that are the kinds of things that Tom [King, newly named president of PG&E] would pursue in his new role."
Darbee praised the company's 2006 performance, noting earnings guidance for this year has been bumped up (range of $2.70 to $2.80/share). On a generally accepted accounting principles (GAAP) basis, profits were $991 million, or $2.76/share, for 2006, compared with $917 million, or $2.37/share, for all of 2005.
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