PG&E Corp. (PG&E) announced Wednesday that the company suffered financially during the first quarter of 2011 as its utility subsidiary, Pacific Gas and Electric Co., continued to address safety issues over its natural gas pipeline network in the wake of an explosion last September.
San Francisco-based PG&E reported that its net income for 1Q2011 totaled $199 million, or 50 cents/share, a nearly 29% decline from the same quarter a year ago when the company reported earnings of $258 million at 67 cents/share.
"The board and all of our employees deeply understand and feel in every way how the events of the last year have affected the company," Interim CEO Lee Cox said during Wednesday's earnings call. "Right now we are all very focused on doing whatever it takes to fix our problems and to regain the public's trust. A lot of projects are already underway to do that."
According to PG&E, the company spent $51 million on pipeline safety during 1Q2011 and has spent $114 million overall since a pipeline exploded on Sept. 9 in a residential neighborhood in San Bruno, CA, killing eight people (see Daily GPI, Oct. 21, 2010; Sept. 13, 2010). Another $220 million has been set aside for third-party liabilities from the accident.
PG&E said it has reviewed about 1.3 million documents so far, poring over gas pipeline pressure records spanning several decades. The company has also been going through records over what type of welding was used to join pipeline segments (see Daily GPI, April 20).
Chris Johns, president of the utility subsidiary, said Wednesday the company would need to answer questions from the California Public Utilities Commission (CPUC) over pipeline maintenance procedures dating back to the 1950s.
Quarterly earnings from operations, excluding the pipeline safety work, declined from $303 million (79 cents/share) in 1Q2010 to $230 million (58 cents/share) in 1Q2011, a 24% decrease. The company blamed the decline on severe winter storms and costs associated with cases before the CPUC. Those cases involve its general rates and gas transmission and storage.
"We're disappointed in our quarterly results," PG&E CFO Kent Harvey said, adding that the pipeline safety work would affect earnings through the entire year. "Given the challenges we're working through this year, we plan to maintain our dividend at its current level for 2011."
Meanwhile PG&E is also trying to navigate an issue involving defective smart meters in the San Francisco Bay Area (see Daily GPI, May 4), and is at loggerheads with the CPUC over the company's plans to test the pressure of hundreds of miles of natural gas transmission pipelines (see Daily GPI, April 29).
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