Having sold unprofitable Texas natural gas businesses and begunto dispose of its unprofitable energy services business, PG&ECorp. reported an 80% increase in first quarter results, comparedto the year-earlier period, earning $284 million, or 79cents-per-share. Its slimmed-down national energy group now focusedon merchant power generation and trading contributed 16cents-per-share to those results, said CEO Robert Glynn, Jr.

Glynn characterized the results as “particularly strong,”following within weeks and months of the sale of money-losingnonutility energy businesses, and noting that the overall corporateeffort is now in a “good position” to achieve its goal of earningsgrowth in the range of 8-10% this year. “The results are verypositive and give us more confidence for the rest of the year,”said Glynn.

The California-based company went to Boston for its annualshareholders meeting to emphasize its multi-billion-dollarinvestment in merchant generating plants in New England where powerprices are up for the portfolio of plants it purchased severalyears ago from New England Electric System.

The bulk of the earnings continue to come from the regulatedutility, which had net earnings of $228 million, or 63cents-per-share. Resolution of a long-standing general rate case byCalifornia regulators and uninterrupted operations at PG&E’smajor nuclear plant at Diablo Canyon combined to account for 21cents-per-share of the earnings.

PG&E’s trading “across the board” for gas and electricitywas in the black for the first time in the first quarter, and itsPacific Northwest gas transmission business is “consistentlymeeting expectations,” said Glynn. He cited the generating unit’sniche business of providing up to 200 MW of mobile generationcapacity that can be moved to follow power demand in coordinationwith its trading operations as a potential growth opportunity.

Thomas Boren, head of the nonutility national energy group, saidthe sales of its Texas gas assets and the energy services businessshould be completed by mid-year. He said PG&E intends tocontinually tinker with its portfolio mix in the nonutility area,particularly in the merchant power plant business.

Richard Nemec, Los Angeles

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