NGI The Weekly Gas Market Report / NGI All News Access

PG&E Earnings Rise Sligthly, Non-Utility Operations Improve

January 25, 1999
/ Print
| Share More
/ Text Size+

PG&E Earnings Rise Sligthly, Non-Utility Operations Improve

Thanks to a strong fourth quarter, San Francisco-based PG&ampE 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 the red.

Overall, PG&ampE 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&ampE 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&ampE 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&ampE Energy Trading and PG&ampE 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&ampE'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&ampE 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&ampE 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

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus