PG&E Corp.’s priorities this year center on managing costs as part of its multi-billion infusion of investment in utility infrastructure at Pacific Gas and Electric Co. Major electric and natural gas supply projects are still in early and less certain stages of development, according to senior PG&E officials who spoke to financial analysts Friday during a conference call in which the company announced increased earnings for the fourth quarter and full year in 2007, compared with similar periods in 2006.
As part of its cost controls PG&E will eliminate about 300 jobs in 2008, according to PG&E officials who reiterated that they delivered “solid” 2007 results ($1 billion, or $2.78/share, in profits for the full year, compared to $991 million, or $2.76/share, for 2006; and $203 million, or 56 cents/share in the fourth quarter last year, compared to $152 million, or 43 cents/share, in the same quarter in 2006). Roughly 200 of the positions being eliminated are management jobs.
“We look to continue to manage costs and capture operating efficiencies to strengthen our utility infrastructure system, and to that end we will maintain and build on the relationships we have developed with our regulators, elected officials and other stakeholders,” said PG&E CEO Peter Darbee. “Regarding sustainability, we intend to continue to be an environmental leader.”
Darbee called global warming a “game-changing development” for the energy industry. Current Congressional proposals, such as the Lieberman-Warner bill, are just the start, said Darbee, who thinks that after the November elections there will be increased legislative and regulatory attention given to climate change. “Leadership in this area is the right thing to do,” he said.
Darbee said that the utility’s customers, regulators and policymakers expect PG&E to play this leadership role, and therefore, “it is in the best interest of our shareholders.”
PG&E doesn’t view its two proposed western natural gas interstate pipelines — Pacific Connector in Oregon and Ruby Pipeline out of the Rockies — as being in conflict with one another. It doesn’t have to be one project or the other; it could be both, according to PG&E CFO Christopher Johns.
“One of our objectives is to look for as many opportunities to bring in new gas supplies to the state from as many different resources as we can,” Johns said. “Gas is the major form of generating electricity in the state, so when we look at the various projects, it is hard to speculate which ones may or may not get through the end process.
“We look at one bringing gas from the Rockies and the other having opportunities to bring gas from liquefied natural gas (LNG) facilities. We don’t know that they would absolutely negate each other.”
Late last year PG&E signed a letter of intent to acquire a 25.5% interest in El Paso Corp.’s Ruby project, extending a new pipeline 680 miles from the Opal Hub in Wyoming to the Malin, OR, interconnect near California’s northern border. Another project in which PG&E is a partner would build a new pipeline from a proposed LNG terminal along Oregon’s coast to north-south interstate pipelines now taking gas into California through the Malin hub (see Daily GPI, Dec. 28, 2007).
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