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PG&E remains in recovery

Oakland Tribune,  Feb 20, 2004  by Michael Liedtke, Associated Press

SAN FRANCISCO -- The corporate parent of bankrupt utility Pacific Gas and Electric posted a fourth-quarter profit of $37 million, continuing a robust recovery from the California power crisis that crippled the company.

PG&E Corp. said Thursday that its earnings of 9 cents per share reversed a loss of $2.2 billion, or $5.41 per share, during the same three-month period in 2002.

Revenue totaled $2.5 billion, a 6 percent increase from the previous year.

For all of 2003, PG&E earned $420 million, or $1.06 per share, on revenue of $10.4 billion. In 2002, the San Francisco-based company lost $874 million, or $2.26 per share, on revenue of $10.5 billion.

The turnaround capped an exceptional year for PG&E Corp.'s shareholders and management.

PG&E's stock doubled in value during 2003, largely reflecting investors' delight with the reorganization plan that will saddle Pacific Gas and Electric's customers with most of the costs for bailing out the utility from bankruptcy.

The company rewarded its management for the coup by paying bonuses totaling $84.5 million to 17 current and former executives.

PG&E Chairman Robert Glynn Jr. was the biggest winner in the group, pocketing $17.1 million under an incentive plan approved in the midst of a California energy crisis that resulted in rolling blackouts in PG&E's service territory during 2001.

California ran short of electricity after wholesale power costs soared far above the prices paid by households and businesses, causing a financial strain that prompted Pacific Gas and Electric to seek shelter in bankruptcy court.

PG&E executives reassured analysts Thursday that the utility is on track to emerge from Chapter 11 bankruptcy protection some time in April. The timetable means California's largest power utility will have spent more than three years in bankruptcy.

Pacific Gas and Electric has recovered much of its financial strength during its bankrupt years, largely because power costs have plunged dramatically since 2001. The utility ended 2003 with $3.4 billion in cash after posting an operating profit of $616 million during the year.

But the utility still has more than $12 billion in debts to pay, and much of that burden will be passed along to its 4.8 million electricity customers under a bailout plan that has been approved by the California Public Utilities Commission and U.S. Bankruptcy Judge Dennis Montali.

Both those decisions are under appeal from opponents who say the bailout is too generous, but PG&E predicted the challenges won't stop the utility from exiting bankruptcy in April.

When the plan was approved in December, the bailout was expected to cost ratepayers $6.2 billion to $8.2 billion, or an average of $1,300 to $1,700 per customer, spread over nine years. But PG&E expects to lower the bill by reducing its electricity rates by $875 million this year.

The bailout will help PG&E restore its dividend, which has been suspended throughout the utility's bankruptcy. PG&E hopes to begin paying the dividend again during the second half of 2005.

PG&E's shares closed unchanged Thursday at $27.73 on the New York Stock Exchange.

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