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PG&E Profits Jump 56%; Power, Gas Transmission Drivers

Bolstered by cost recovery and higher revenues in its electric and natural gas transmission operations, PG&E Corp. Wednesday reported sharply higher third-quarter earnings, up 56% from results for the same period in 2005. Net income for the third quarter was $393 million ($1.09/share) compared with $252 million (63 cents/share) in the third quarter last year. As a result, the utility holding company increased its earnings guidance for 2006 by 5 cents/share to the range of $2.45-$2.55.

For the nine months ended Sept. 30, PG&E reported net income of $839 million ($2.36/share) compared with $737 million ($1.91/share) for the first nine months of 2005.

Utility operations at Pacific Gas and Electric Co. comprised the vast majority of the earnings for both periods -- $375 million for the third quarter and $816 million for the first nine months this year, compared to $244 million and $735 million for the same periods, respectively, last year. These results were on a "generally accepted accounting principles" (GAAP) basis.

"Strong operational performance, combined with better than anticipated results in several areas, elevated our overall quarterly results to put the company on course to exceed prior expectations for 2006," said PG&E CEO Peter Darbee. "Looking ahead to 2007, our outlook remains in line with our previous guidance.

"For the most recent period, net income rose primarily due to recovery of costs incurred for electric transmission scheduling services, recovery of interest and litigation costs incurred in connection with disputed generator claims [as part of the liquidation of the defunct California Power Exchange], and higher gas transmission revenue."

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