Setting aside court and regulatory appeals, Pacific Gas and Electric Co. is marching ahead with plans to emerge from bankruptcy in the second quarter with a lower-rung investment-grade credit rating, executives assured financial analysts Thursday during a conference call on the parent company and utility earnings for 2003.
The California Public Utilities Commission’s and federal bankruptcy court’s separate approvals last December have created “momentum for 2004,” according to Robert Glynn, PG&E Corp. CEO, who cautioned that the “real work lies ahead” before the utility is fully back on its financial feet. The pending appeals by two dissident CPUC commissioners in the courts and at the regulatory commission will not “significantly add to the cost of the financing” now being lined up by the utility because “the likelihood of those appeals succeeding is very small,” said Peter Darbee, PG&E CFO.
Several billions dollars of financing should be worked out by April, but a CPUC financing order and key state legislation to establish a dedicated rate component for the more than $2 billion regulatory asset part of the financing will need to be completed later in the second quarter, company officials said.
During the conference call, which was the shortest the company has hosted since its utility and merchant units’ financial woes started in 2001, PG&E officials indicated the company is actively asking for dismissals of the various challenges to the court and CPUC rulings concerning the utility. In addition, PG&E has asked that challenges be dropped to its keeping more than $700 million in federal income tax rebates tied to its former merchant energy unit, renamed National Electric and Gas Transmission (NEGT).
As of the end of 2003, the holding company had $361 million in tax benefits that must be set aside in a reserve among the corporation’s $1.04 billion of cash; another $400 million is set aside from the same benefits as part of the utility’s year-end $3.4 billion of cash, Darbee said.
Aside from cutting its financial and legal ties to NEGT, Glynn said the utility “continues to move forward as planned” on what he characterized as “a clear path to stability and increasing financial performance” through the upcoming emergence from Chapter 11.
PG&E’s utility has targeted April to complete its long-term debt sale, which it expects to be “the last condition” of the bankruptcy court-approved reorganization plan. The plan then calls for 11 business days to elapse before the emergence is official.
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