May 1, 2014
PG&E Corporation's (NYSE: PCG) first-quarter 2014 net income after dividends on preferred stock (also called "income available for common shareholders") was $227 million or $0.49 per share, as reported in accordance with generally accepted accounting principles (GAAP). This compares with $239 million, or $0.55 per share, for the first quarter of 2013.
GAAP results include items that management does not consider part of normal, ongoing operations (items impacting comparability), which totaled $40 million pre-tax, or $0.05 per share, for the quarter. These items related to natural gas matters, including costs to make safety improvements as well as legal and other costs. The cost to shareholders for natural gas pipeline safety-related work incurred since the San Bruno accident or committed over the next several years is now $2.7 billion, based on current forecasts.
"Our financial results have been challenged by the impact of unrecovered costs in our natural gas business. It remains vital to our pipeline safety and reliability enhancement program that state regulators resolve pending gas proceedings in a timely and balanced manner," said Tony Earley, Chairman, CEO, and President of PG&E Corporation. "This quarter, with thoughtful planning and execution, we continued to upgrade our gas transmission and distribution operations, improved electric reliability, and successfully completed a refueling outage at our Diablo Canyon nuclear plant. This work will help ensure the safety and reliability of our gas and electric service and position our company for long-term success."
First-Quarter Earnings from Operations
On a non-GAAP basis, excluding items impacting comparability, PG&E Corporation's earnings from operations for the first quarter of 2014 were $251 million, or $0.54 per share, down from $276 million, or $0.63 per share, during the same period in 2013. The major factors contributing to this quarter-over-quarter difference included the negative impacts of a delay in cost recovery associated with the 2014 General Rate Case, and an increase in the number of shares outstanding.
PG&E Corporation discloses historical financial results based on "earnings from operations" in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations. Earnings from operations are not a substitute or alternative for consolidated income available for common shareholders presented in accordance with GAAP. See the accompanying tables for a reconciliation of the differences between results based on earnings from operations and results based on consolidated income available for common shareholders.
Management's statement regarding the cost to shareholders for natural gas pipeline safety-related work incurred since the San Bruno accident or committed over the next several years is a forward-looking statement that is based on assumptions about the estimated scope and timing of work and current cost forecasts. The statement and the underlying assumptions are necessarily subject to various risks and uncertainties. PG&E Corporation and Pacific Gas and Electric Company ("Utility") are not able to predict all the factors that may affect future results. Some of the factors that could cause actual results to differ materially include:
- when and how the pending CPUC investigations and enforcement matters related to the Utility's natural gas system operating practices and the San Bruno accident are concluded, including the amount of natural gas transmission costs the Utility will be prohibited from recovering; whether the CPUC appoints a monitor to oversee the Utility's natural gas operations; and the cost of any remedial actions the Utility may be ordered to perform;
- the outcomes of pending CPUC proceedings such as the Gas Transmission and Storage Rate Case and the update application related to work under the Pipeline Safety Enhancement Plan and whether the cost and revenue forecasts assumed in such outcomes prove to be accurate;
- changes in cost forecasts;
- changes in assumptions regarding the scope and timing of natural gas related work, including costs to comply with local ordinances and environmental and other permits; and
- the other factors disclosed in PG&E Corporation's and the Utility's joint 2013 Annual Report and Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a Fortune 200 energy-based holding company, headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, California's largest investor-owned utility. PG&E serves more than 15 million Californians across a 70,000 square-mile service area in Northern and Central California. For more information, visit www.pgecorp.com.
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