PRESS RELEASES 2000 RELEASE
FOR IMMEDIATE RELEASE
April 20, 2000
Contact: Greg S. Pruett
EDITORS: Please do not use "Pacific Gas and Electric" or "PG&E" when referring to PG&E Corporation or its National Energy Group. The PG&E National Energy Group is not the same company as Pacific Gas and Electric Company, the utility, and is not regulated by the California Public Utilities Commission. Customers of Pacific Gas and Electric Company do not have to buy products or services from the National Energy Group in order to continue to receive quality regulated services from Pacific Gas and Electric Company.

PG&E CORPORATION POSTS STRONG EARNINGS, PACED BY RECORD EARNINGS OF NATIONAL ENERGY GROUP

  • PG&E Corporation posts first quarter earnings per share from operations of $0.79, up from $0.44 in the first quarter in 1999.

  • National Energy Group posts record earnings per share from operations of $0.16 in the first quarter, an increase from first quarter 1999 results of $0.05.

  • Pacific Gas and Electric Company posts first quarter earnings from operations of $0.63 per share, up from $0.39 for the first quarter of 1999.

  • First quarter results led by two-fold increase from National Energy Group operations.

(Boston, MA) -- PG&E Corporation (NYSE: PCG) today announced first quarter 2000 earnings from operations of $0.79 cents per share, or $284 million, representing an 80 percent increase over first quarter 1999 results from operations of $0.44 per share, or $163 million.

The 80 percent quarter-over-quarter increase included favorable contributions associated with the resolution of utility unit Pacific Gas and Electric Company’s General Rate Case, a full first quarter of operation at the Diablo Canyon Nuclear Power Plant, which had a refueling outage during the first quarter of 1999, improved performance of the PG&E National Energy Group’s energy trading operations, and discontinued operations in the PG&E National Energy Group.

“We delivered very strong financial performance in the first quarter of 2000,” said Robert D. Glynn, Jr., Chairman, CEO, and President of PG&E Corporation. “Each part of our business is delivering excellent operational and financial performance.”

Earnings from operations for the first quarter from the PG&E National Energy Group were $0.16 per share or $56 million.

First quarter results for the PG&E National Energy Group include the strong performance from its power generation operations, which delivered $0.10, an 11 percent increase over first quarter 1999 results.

The energy commodities trading and natural gas operations also made significant contributions to total first quarter performance. Earnings from energy trading operations improved from a ($0.01) loss in the first quarter of 1999 to a gain of $0.04 in the first quarter of 2000. The natural gas transmission business recorded a gain from operations of $0.04 compared with a ($0.01) loss for the first quarter of 1999.

Utility unit Pacific Gas and Electric Company reported operating earnings of $0.63 per share, or $228 million.

The unit’s financial performance reflected several items, including a final decision in its 1999 General Rate Case and the continued excellent performance of its two-unit nuclear power plant, Diablo Canyon. The plant had no refueling outages in the first quarter of 2000, compared with one in the first quarter of 1999.

In addition to strong earnings performance, the Corporation achieved a number of significant milestones during the quarter and launched new initiatives aimed at advancing its PG&E National Energy Strategy.

“During the first quarter of 2000, we moved into high gear our strategy to grow the contribution to operating earnings from our PG&E National Energy Group,” said Glynn. “Our management team continued its strong focus on ensuring that our utility unit earns its authorized rate of return, while providing safe, reliable, and responsive service to its customers.”

“Our PG&E National Energy Group this quarter completed financing for the 1,048-megawatt La Paloma power plant under construction in Southern California, the largest merchant plant financing to date. We also received major permits for several power facilities now under development, including our Athens and Mantua Creek power plants in New York and New Jersey, our 1,000-megawatt Harquahala plant planned for construction in Arizona, and for several mobile ‘peaking’ units that will be available this summer to help meet high local demand for electricity,” said Glynn.

Glynn also noted that PG&E Corporation announced plans to offer the first 100-percent wind-generated energy product – Pure WindTM. “Last week we broke ground for Madison Windpower, the largest wind generating facility in the Eastern United States and one of the first merchant wind generating projects outside of California. Pure WindTM will offer the marketplace the greenest, cleanest, 100-percent emissions-free energy products available today. It will allow energy customers to support the next wave of environmental excellence in power generation.”

In the Corporation’s utility unit, the first quarter saw the reporting of survey results that showed continued high marks for its customer service efforts. More than 91 percent of those responding to an opinion poll rated the unit’s service as excellent, very good, or good.

As part of its ongoing customer service initiative, Pacific Gas and Electric Company last month began offering its 4.5 million electric and 4 million natural gas customers the option of using the Internet to schedule appointments, make payment arrangements, and review their accounts.

The unit also entered into a strategic alliance with four other energy companies that own and operate nuclear plants of similar design and size as the Diablo Canyon Power Plant. During 2000, this alliance will focus on joint initiatives related to procurement, refueling outages, and regulatory affairs. The goal of this alliance is to improve operations, share best practices, and reduce costs.

The Corporation also is participating in a project along with 11 other energy companies to build what will be the country's largest fiber optic network.

The fiber optic system will be operated by Aerie Networks, a newly formed company that will compete in the broadband technology industry. Aerie's national network, which is expected to consist of almost nine million miles of fiber, will provide regional fiber optic networks with bandwidth capacity to serve over 90 percent of the U.S. business market. The network is currently scheduled to begin operating by 2003.

During the first quarter of 2000 PG&E Corporation joined a consortium of 15 energy companies to explore opportunities to establish a new business-to-business Internet marketplace for the purchase of goods and services. Glynn emphasized that PG&E Corporation is committed to supplier diversity, saying, "It is our intention that 'new economy' approaches to purchasing benefit all segments of the supplier community."

According to Glynn the e-commerce initiative was one of several taken during the quarter that signal PG&E Corporation’s intention to capture opportunities in the new economy. "This and other e-commerce initiatives at PG&E Corporation are designed to use the power of the Internet to do our business more quickly and efficiently and to help both buyers and sellers win," said Glynn.

“Our financial results this quarter, combined with many accomplishments across all our businesses, provide a solid foundation for the remainder of 2000,” said Glynn. “We are looking forward to a strong year.”

The Company’s reported basic earnings per share were $0.78 and fully diluted earnings per share were $0.77.

This press release contains forward-looking statements regarding the future performance of the PG&E National Energy Group and the Corporation. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Some of the factors that could cause actual results to differ materially include: the pace and extent of the ongoing restructuring of the electric and natural gas industries across the United States; future conditions in the energy markets; the extent to which current or planned generation development projects are completed and the pace and cost of such completion; generating capacity expansion and retirements by others; the Corporation's ability to successfully manage fluctuations in commodity gas and electricity prices; the method and timing of disposition and valuation of the Utility's hydroelectric generation assets; the timing of the completion of the Utility's transition cost recovery and the consequent end of the current electric rate freeze in California; the pace and extent of competition in the California generation market and its impact on the Utility's costs and resulting collection of transition costs; future operating performance of the Diablo Canyon Nuclear Power Plant; and other factors discussed in reports filed with the Securities and Exchange Commission by the Corporation and Pacific Gas and Electric Company.

PG&E CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED INCOME
(unaudited)

Three months ended
March 31,
(in millions, except per share amounts)
2000
1999
Operating Revenues
Pacific Gas and Electric Company
$

2,218

$

2,085

National Energy Group

PG&E Generating

312

289

PG&E Gas Transmission

– Texas

225

357

– Northwest

57

58

PG&E Energy Trading

2,557

2,631

Eliminations and Other

(361)

(294)

Total operating revenues
5,008
5,126
Operating Expenses
Cost of energy for Pacific Gas and
Electric Company

796

655

Cost of energy–National Energy Group

2,472

2,797

Operating expenses, including
       
depreciation  

1,064

1,213

           
 
Total operating expenses
4,332
4,665
Operating Income
676
461
Interest expense and other
(168)
(180)
Income Before Income Taxes
508
281
Income taxes
228
114
Income before discontinued operations
and cumulative effect of a change in
accounting principle   280     167    
Discontinued operations
Loss from operations of PG&E Energy
Services (net of applicable income
taxes of $7 million)     (8)    
                   
Net income before cumulative effect
of a change in accounting principle 280     159    
Cumulative effect of a change in an
accounting principle (net of applicable
income taxes of $8 million)     12    
Net Income
$
280
$
171
Weighted Average Common Shares Outstanding
361
373
Earnings Per Common Share, Basic
Income from continuing operations
$
0.78
$
0.45
Discontinued operations
(0.02)
Cumulative effect of a change in an
accounting principle
0.03
           
             
Net income
$
0.78
$
0.46
Earnings Per Common Share, Diluted
Income from continuing operations
$
0.77
$
0.39
Discontinued operations
(0.02)
Cumulative effect of a change in an
accounting principle
0.03
           
             
Net income
$
0.77
$
0.40
Dividends Declared Per Common Share
$
0.30
$
0.30
Earnings and earnings per share for PG&E Corporation's lines of business are as follows:
Earnings (millions)
 
Earnings per Share (Basic)
Three months ended
March 31,
Three months ended
March 31,

2000
 

1999

2000

1999
Utility
 
Pacific Gas and Electric Company
$
228
 
$
147
$
0.63
$
0.39
 
National Energy Group
 
PG&E Generating

35

 

35

0.10

0.09

PG&E Gas Transmission

 

– Texas

 

(20)

(0.05)

– Northwest
14
15
0.04
0.04
PG&E Energy Trading
15
(3)
0.04
(0.01)
PG&E Energy Services
(8)
(0.02)
Eliminations and Other
(8)
(3)
(0.02)
 
Subtotal - National Energy Group
56
 
16
0.16
0.05
 
Earnings from Operations 284 163 0.79 0.44
Items affecting comparability (a) (4) 8 (0.01) 0.02
 
Reported Earnings
$
280
 
$
171
$
0.78
$
0.46
 

(a) Items impacting comparability include severance charges related to the restructuring of the National Energy Group of $4 million ($0.01 per share) in 2000 and PG&E Gas Transmission of $4 million ($.01 per share) in 1999. Also in 1999, items offsetting comparability includes income from a change in accounting principle of $12 million ($.03 per share).


 

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