PG&E Energy Services Contracts With Pepsi Bottler
PG&E Energy Services signed a $5 million contract with
Pepsi-Cola General Bottlers Inc. to supply gas, energy management,
and billing services to all of its Midwest manufacturing and
The multi-year agreement is expected to save Pepsi's bottling
facilities more than $250,000 and calls for PG&E Energy Services
to supply gas to 67 manufacturing and distribution centers in
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Missouri,
Ohio, Virginia, West Virginia, and Wisconsin. PG&E Energy
Services also will provide billing management services, including
aggregation and summary of bills for each facility with usage
"When a large portion of your operating budget must go to
energy-related expenses, it is essential to find a national company
with the expertise and resources to fine-tune your efficiency and
reduce operating costs," said Gary Kowaleski energy manager for
Pepsi-Cola General Bottlers.
"Our agreement with Pepsi-Cola General Bottlers reinforces our
presence in Chicago and the Midwest," said Jim Davis PG&E Energy
Services' senior vice president of integrated services.
Chicago-based Pepsi-Cola General Bottlers is the principal
operating company of Whitman Corp. and the nation's largest
independently franchised Pepsi bottler not majority-owned by
PepsiCo. The company operates in 12 central U.S. states, as well as
Poland, Russia, Latvia, Lithuania, and Estonia.
PG&E Energy Services has more than $2 billion in long-term
contracts. The company has agreements with McDonald's and Carl's
Jr. restaurants, Safeway, Vons and Lucky grocery stores, Rite Aid
and Sav-on drug stores, Neiman Marcus, ARCO gas stations and
convenience stores, Blockbuster video and music stores, IBM,
Smucker's, and others. PG&E Energy Services said it plans to
compete in the Illinois electricity market when it opens to
competition next October.
Forms New Alliance Team
The unregulated energy services and trading division of PG&E
Corp. announced late last week the formation of a new energy
alliance team that will focus on marketing, structuring, and
managing the company's strategic energy alliances with major
industrial customers and utilities. "We believe that creating the
energy alliance team and allying the marketing organizations for
both power and gas allows us to take full advantage of the
synergies across the organizations and to best serve our
customers," said Lyn Maddox, CEO of PG&E Energy Trading. The
team will be led by senior vice president Chris Sauer.
Sauer said the team intends to look for large national,
process-intensive industrial partners in businesses like refining,
chemicals, petrochemicals, pulp and paper, industrial gas
processing, mining and metals. "We're focused on these industries
because they typically have many facilities around the country.
What we're looking at are customers that have very diverse needs
including electricity, gas, steam, potentially capital improvements
that reduce energy costs and consumption," said Sauer.
Good examples of the alliances PG&E wants to form are its
current relationships with ARCO Chemicals, Ultramar Diamond
Shamrock and Orange and Rockland Utilities. "There are some really
premier industrial companies that have facilities throughout North
America that are really very interested in our approach," he said,
adding a new alliance should be announced soon, possibly in the
next few months.
PG&E Earnings Drop on Australian Sale
Despite great performance from its unregulated energy marketing
and services arm, particularly its $1.9 billion increase in
operating revenues, PG&E Corp. said second quarter earnings
suffered. Costs associated with electric restructuring and its $120
million sale of Australian assets to Duke Energy caused the set
back, said CEO Robert Glynn.
A lower rate of exchange between the Australian and U.S. dollar
resulted in a six-cent charge ($23 million loss) taken during the
second quarter. The company reported earnings of $174 million (46
cents per share), compared with $193 million (49 cents per share)
in 2Q97. Excluding one-time gains and charges in both 1998 and
1997, the operating earnings of the company's unregulated
businesses were 4 cents per share in the second quarter, up from 1
cent per share in the second quarter of 1997. In net earnings per
share, the unregulated business unit lost 0.02 cents/share,
compared to a 0.19 cent/share gain in 2Q97.
Nevertheless, Glynn praised the performance of the company's
marketing division. "We are pleased with the strong aggregate
performance of our unregulated businesses in the second quarter,
particularly in spite of exceptionally weak market fundamentals in
transportation of natural gas and natural gas liquids for our
PG&E Gas Transmission-Texas gas operations," noted Glynn. "I am
particularly pleased at the performance of our Houston-based energy
commodities trading affiliate, PG&E Energy Trading, which
managed its operations effectively during recent turbulent electric
market activity in the Midwest."
Joe Fisher, Houston; Rocco Canonica