Text of the prepared remarks   Click here to view video archive of presentation
April 20, 2005
ISSUED BY:   Corporate Communications 1-800-743-6397


(San Ramon, CA) -- In remarks today at the joint annual meeting of the shareholders of PG&E Corporation and Pacific Gas and Electric Company, PG&E Corporation (NYSE: PCG) President and CEO Peter Darbee and other members of the senior management team presented a solid outlook for 2005 and beyond.

Darbee, together with Gordon Smith, Pacific Gas and Electric Company President and CEO, and Chris Johns, PG&E Corporation Chief Financial Officer, reviewed the Corporation’s 2004 accomplishments and the outlook for continued solid financial performance, new utility investments to better serve customers, and the transformation of the Pacific Gas and Electric Company’s operations in order to deliver value for customers and shareholders.

“PG&E is stronger now than at any time in the past decade,” Darbee told shareholders. “The balance sheet is solid. Cash flows are healthy. And our credit is sound. … Our goal is to use our strong platform to identify and implement ways to deliver better, faster and more cost-effective service to our customers.”

Darbee said the Corporation plans to use its strong cash flows to make new investments in the core utility business, pay dividends and repurchase stock.

In 2005, dividends and stock repurchases are expected to total $2.0 billion, he said. Shareholders recently received a quarterly dividend payment of $0.30 per share, the first dividend since the fourth quarter of 2000.

Darbee said the Corporation sees room to grow dividends as earnings from operations increase over time. “We intend to maintain a dividend payout ratio in the range of 50 percent to 70 percent of earnings per share from operations,” Darbee said. He said dividends are anticipated to rise “not in lock step, but somewhat proportionately” with increasing earnings from operations.

Smith said Pacific Gas and Electric Company’s strong cash flows are also providing capital for investments in replacing and upgrading infrastructure, and investing in new technologies, in order to better serve customers. As examples, he cited potential investments in new electric generation and an initiative to install 9 million new high-tech electric and gas meters that would enable the company to read meters remotely and identify and respond to outages more quickly, among other benefits.

Johns stated that the company’s base-level projections for capital expenditures in electric and gas transmission and distribution, and electric generation facilities, are expected to average approximately $2.0 billion per year for 2005 through 2009. Potential incremental investments could add up to $2.0 billion over the 2005 through 2009 timeframe.

Based on this expected level of investment, Johns said the Corporation expects Pacific Gas and Electric Company’s rate base to grow between 4.5 percent and 6.5 percent annually from 2005 through 2009.

As a result, he said, the Corporation continues to expect earnings per share from operations to grow on average between 4 percent and 6 percent annually through 2009.

Johns reaffirmed the Corporation’s previously issued 2005 and 2006 guidance for earnings from operations. Projections are based on the expectation that the utility will earn its authorized return on equity of 11.22 percent, among other assumptions.

This press release contains forward-looking statements regarding estimated earnings for 2005 and 2006 and a projected growth rate for earnings per share from operations through 2009, the targeted level of stock repurchases and dividends in 2005 based on anticipated cash flows, and future capital expenditures. These statements are based on current expectations and assumptions which management believes are reasonable and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that the assumptions on which the statements are based (including that the Utility earns an authorized return on equity of 11.22 percent, and the issuance of the second series of energy recovery bonds in late 2005) prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include:

  • The timing and resolution of the pending appeals of the CPUC’s approval of the settlement agreement and the bankruptcy court confirmation of the Utility’s plan of reorganization;
  • Unanticipated changes in operating expenses or capital expenditures, which may affect the Utility’s ability to earn its authorized rate of return;
  • The level and volatility of wholesale electricity and natural gas prices and supplies, the Utility’s ability to manage and respond to the levels and volatility successfully, and the extent to which the Utility is able to timely recover increased costs related to such volatility;
  • The operation of the Utility’s Diablo Canyon nuclear power plant, which exposes the Utility to potentially significant environmental costs and capital expenditure outlays;
  • The impact of current and future ratemaking actions of the CPUC, including the risk of material differences between forecasted costs used to determine rates and actual costs incurred;
  • Whether the assumptions and forecasts underlying the Utility’s CPUC-approved long-term electricity procurement plan prove to be accurate, the terms and conditions of the generation or procurement commitments the Utility enters into in connection with its plan, the extent to which the Utility is able to recover the costs it incurs in connection with these commitments, and the extent to which a failure to perform by any of the counterparties to the Utility’s electricity purchase contracts or the Department of Water Resources’ contracts allocated to the Utility’s customers affects the Utility’s ability to meet its obligations or to recover its costs;
  • The extent to which the CPUC or the FERC delays or denies recovery of the Utility’s costs, including electricity purchase costs, from customers due to a regulatory determination that such costs were not reasonable or prudent or for other reasons resulting in write-offs of regulatory balancing accounts;
  • How the CPUC administers the capital structure, stand-alone dividend and first priority conditions of the CPUC’s decisions permitting the establishment of holding companies for the California investor-owned electric utilities;
  • The impact of future legislative or regulatory actions or policies;
  • Increased competition;
  • The outcome of pending litigation; and
  • Other factors discussed in PG&E Corporation's SEC reports.