On an earnings-from-operations basis, PG&E Corp. Tuesday reported third quarter earnings of $242 million, or 57 cents/share, in the third quarter, compared with $174 million, or 42 cents/ share in the third quarter last year. The difference in quarter-over-quarter earnings from operations primarily reflects the lack of a final 2003 general rate case (GRC) decision in the third quarter of last year, according to PG&E.

On an overall corporate basis, the utility holding company reported $228 million, or 53 cents/share, in consolidated net income in this year’s third quarter. Last year in the third quarter, consolidated net income was $510 million, or $1.23/share, reflecting what the company called “the effects of generation-related revenues in excess of generation-related costs (headroom).” Beginning in 2004, the Pacific Gas and Electric Co. utility no longer collects headroom, the company said.

As part of its report PG&E had a large section covering “Items Impacting Comparability,” reconciling earnings from operations with consolidated net income as reported in accordance with so-called “generally accepted accounting principles” (GAAP). PG&E said it also excluded from earnings-from-operations the prior-year results from National Energy & Gas Transmission, Inc. (NEGT).

For the third quarter, items impacting comparability at the corporation and its utility, Pacific Gas and Electric Co., included incremental interest costs of $7 million, or 2 cents/share, associated with the California energy crisis and the utility’s Chapter 11 filing; costs of $4 million, or 1 cent/share, related to NEGT’s Chapter 11 filing; and costs of $3 million, or 1 cent/share, related to the change in market value of dividend participation rights associated with the Corporation’s convertible notes.

As he has repeated in several recent financial forums, PG&E CEO Robert Glynn emphasized the quarterly results reflect “solid utility operations, a healthy business environment, a stronger balance sheet, and substantial cash flows.” He called these results the “foundation” for the company’s targets for resuming common stock dividends the first half of next year, along with share repurchases and investments in the core utility business.

PG&E’s targets, as reiterated Tuesday, include paying an annual dividend of $1.20/share starting in April 2005, assuming the utility refinances a part of its balance sheet in early 2005 as an outgrowth of its reorganization plan coming out of three years in Chapter 11 bankruptcy last April.

“Assuming the utility also refinances another part of its balance sheet in early 2006, the PG&E Corp. expects that $2.7 billion will be available in 2005 and 2006 to pay dividends, buy back shares and make incremental investments in its core utility business beyond the $1.9 billion of annual capital expenditures already planned,” Glynn said.

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