Clobbered by the transfer and sale of various merchant energy assets in the fourth quarter, San Francisco-based PG&E Corp. reported a loss of $874 million, or $2.36/diluted share, for 2002, compared to earnings of $1.099 billion, or $3.02/diluted share, in 2001. The merchant energy unit, PG&E National Energy Group (NEG), booked a $3.4 billion loss in 2002. Without various accounting charges and so-called “headroom” for excess power generation revenues over cost, all lines of business on an operating basis showed a profit, but at lower levels than in 2001.

PG&E recorded earnings of $864 million, or $2.33/diluted share, last year for operations and without headroom. The utility, Pacific Gas and Electric Co., earned $797 million, or $2.15/diluted share for operations and without headroom, compared to $914 million, or $2.51/diluted share in 2001. NEG contributed $13 million, or 3 cents/diluted share. The parent company, PG&E Corp., contributed $54 million, or 15 cents/diluted share, reflecting consolidated tax benefits.

When headroom is included for 2002, the parent company overall earned $1.9 billion, or $5.16/share, and the utility earned $1.848 billion, or $4.98/share.

PG&E Corp. CEO Robert Glynn said that the utility business “remained strong” based on financial performance and operational accomplishments in 2002. He called it a “strong foundation for us to move forward with the utility’s proposed plan of reorganization” in its ongoing Chapter 11 bankruptcy case in a federal court in San Francisco.

In the merchant sector, Glynn reiterated that NEG was continuing its efforts to reach new agreements with its lenders and debt holders on what the company for six months has been calling a “global restructuring plan” to address the financial obligations the company currently cannot meet. While saying the company is “fully engaged” in the financial discussions, Glynn said in a prepared statement that he believes an overall restructuring is an “achievable, though challenging goal.”

Looking ahead, Glynn said each of PG&E’s major business units that have been kept separate from one another are on “clear, independent courses of action,” seeking to eliminate uncertainty and build foundations for “financial performance and value shareholders expect.”

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