PG&E Earnings Rise Sligthly, Non-Utility Operations Improve
Thanks to a strong fourth quarter, San Francisco-based PG&E
Corp. earnings increased slightly in 1998, mainly due to
improvements in its nonutility operations, particularly in the
electricity businesses. Merchant natural gas operations lost money
overall because of Texas operations that continued to operate in
Overall, PG&E earned $719 million on revenues of $19.9
billion last year, compared to $716 million on revenues of $15.4
billion in 1997. Fourth quarter figures for '98 were $196 million
on revenues of $5.4 billion, compared to $94 million on revenues of
$4.8 billion in '97. This was the first full year in which
nonutility operating revenues exceeded revenues from the
substantial utility operations of Pacific Gas and Electric Co. ($11
billion versus $8.9 billion, respectively). Nonutility operations
still lost money, however.
PG&E Corp. CEO Robert Glynn said financial performance
overall in '98 "grew significantly," noting that he is particularly
pleased the unregulated businesses overall "showed dramatic
improvement for the full year." A PG&E Corp. spokesperson
indicated that expectations for this year are that all but the
Texas gas operations, which are hurt by the continuing depressed
gas liquids market, will be operating profitably by the end of
1999, including PG&E Energy Trading and PG&E Energy Services,
both of which continued to lose money in 1998. Among the nonutility
businesses, however, trading pulled in the most operating revenues
last year, the spokesperson said.
The utility continued to provide more than 80% of the earnings,
but PG&E's merchant power plant developer/operator, U.S.
Generating Co., showed a profit on an annual basis for the first
time, contributing almost 15% to the holding company's
earnings-per-share; the natural gas interstate pipeline activities
in the Pacific Northwest similarly showed a profit.
Texas gas operations had the worst relative showing among the
unregulated subsidiaries showing substantial losses, however, the
PG&E Corp. spokesperson reiterated that there are no current
plans to sell any of the Texas assets. "It is simply a matter of
seeing what the market does and if the current weakness in the
market fundamentals begin to improve," said Greg Pruett, PG&E
Corp. vice president. "Currently with those [Texas] assets, we
intend to do everything we can to maximize efficiencies." The
leaders of the natural gas merchant operations "are not headlong in
pursuit of selling assets unless they can see a compelling business
reason to do so," Pruett added.
There is an ongoing effort to consolidate the Portland-based and
Houston/San Antonio-based natural gas operations, eliminating
duplications that exist more than two years after the acquisitions
in Texas. "We recently announced that we are going to streamline
the [nonutility] gas operations and bring them all under one
umbrella, and then look for more opportunities to create
efficiencies and maximize the assets we already have," Pruett said.
Richard Nemec, Los Angeles
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