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March 01, 2006
ISSUED BY:   PG&E Corporation 1-800-743-6397


2007 Earnings Guidance and Capital Investment Plan Presented

(New York, NY) – At a conference today with investors and analysts, PG&E Corporation’s (NYSE: PCG) senior leadership team presented an in-depth review of the company’s strategy and outlook for 2006 and beyond. The team emphasized that it is focused on strengthening utility customer service, investing substantially in the utility’s infrastructure, and securing the energy supplies necessary for a stable and clean energy future in California.

“Delivering the strongest long-term returns for shareholders starts with redesigning our operations and culture around providing excellent customer service,” said Chairman, CEO and President Peter A. Darbee. “We refer to this plan and everything it entails as ‘Transformation,’ and it is the core of our strategy today.”

Darbee said that, through the Transformation effort, Pacific Gas and Electric Company is working to become more efficient and more responsive to customers through restructuring and streamlining utility operations and using new technology. The company shared with analysts the concrete operational performance measures, along with the specific 2006 performance targets for each measure, that it will use to track the utility’s progress, and noted that the performance targets will increase in future years. The performance measures include boosting the utility’s J.D. Power customer satisfaction score, answering customer service calls more quickly, and reducing the frequency and duration of service interruptions.

In addition to better service, the company expects that Transformation will produce significant cost benefits. Chief Financial Officer Chris Johns outlined a proposal to provide customers the benefit of current savings estimates in the next rate case, and to share any savings in excess of these levels between customers and shareholders. The proposal is now before the California Public Utilities Commission (CPUC) as part of the case to set the utility’s base rates for 2007 through 2009.

The rate case also reflects the utility’s plans for substantial investment in its infrastructure to increase reliability and improve customer service. Pacific Gas and Electric Company President and CEO Tom King reiterated prior estimates that base-level capital investments in the 2006 through 2010 period will average $2.5 billion annually. Investments would span all parts of the business, from gas and electric distribution to transmission and generation. Current annual capital investment plans peak in 2007 at approximately $2.85 billion.

King also highlighted the utility’s investments in energy efficiency and renewable power, as a critical part of its planning for California’s energy future. In 2006, the utility plans to invest over $250 million in energy efficiency programs and to increase by 2 percent the portion of its supply that comes from renewable energy sources.

After taking into account increases in renewable supplies and demand reduction through energy efficiency, the utility estimates that growing power demand in its service area will necessitate development of up to 2,200 megawatts of new generation between 2008 and 2010. King reported that, as a result of the utility’s request for offers for new generation resources to meet the need for new power, the utility may make additional investments in new utility-owned generation.

King said that the utility is negotiating agreements that could result in utility-owned facilities capable of providing 800 megawatts. The utility is also negotiating agreements that could secure an additional 1,300 megawatts to be provided under long-term contracts with third-party generators. By the end of March, King said, the utility expects to execute these agreements and file for CPUC approval. If approved, the investments in new generation would be in addition to the proposed capital investments outlined in today’s investor conference.

“Investments in Pacific Gas and Electric Company’s system are essential to strengthening our service, and they provide investors with a solid opportunity to earn returns on a growing rate base,” said King.

Johns reaffirmed the growth forecast for PG&E Corporation’s earnings per share from operations issued earlier this year. As previously announced, the company anticipates earnings per share from operations will grow an average of 7.5 percent annually for 2006 through 2010. Johns also reaffirmed earnings per share from operations guidance for 2006 in the range of $2.40-$2.50 per share. He presented 2007 guidance for the first time in the range of $2.65-$2.75 per share.

The above-target growth from 2006 to 2007 reflects the high levels of anticipated utility capital investment in 2007, combined with plans to reduce the company’s liquidity targets in 2006 and, thereby, make between $100 million and $200 million available for capital investments by the end of this year.

“PG&E Corporation’s current financial health, combined with our strategy to create value by focusing on the customer, represent an excellent opportunity for investors today,” said Darbee. “We look forward to delivering.”

PG&E Corporation bases guidance 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 net income presented in accordance with generally accepted accounting principles (GAAP).

Click here Link%20will%20spawn%20new%20window (10 Kb) for information that reconciles estimated earnings per share from operations with estimated consolidated net income per share in accordance with GAAP.

A webcast of the company’s investor conference and a copy of the presentation slides are available on the PG&E Corporation web site,

This press release contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2006 and 2007 earnings per share from operations and targeted average annual growth rate for earnings per share from operations over the 2006-2010 period. These statements are based on current expectations and various assumptions which management believes are reasonable, including that Pacific Gas and Electric Company (Utility) earns its authorized rate of return, substantial capital investments are made in the Utility’s business as forecasted over the 2006-2010 period, and that share repurchases are made. These statements and assumptions are necessarily subject to various risks and uncertainties the realization or resolution of which are outside of management's control. Actual results may differ materially. Factors that could cause actual results to differ materially include:

  • Unanticipated changes in operating expenses or capital expenditures, which may affect the Utility’s ability to earn its authorized rate of return;
  • How the Utility manages its responsibility to procure electric capacity and energy for its customers;
  • The adequacy and price of natural gas supplies, the ability of the Utility to manage and respond to the volatility of the natural gas market for its customers;
  • The operation of the Utility’s Diablo Canyon nuclear power plant, which could cause the Utility to incur potentially significant environmental costs and capital expenditures, and the extent to which the Utility is able to timely increase its spent nuclear fuel storage capacity at Diablo Canyon;
  • Whether the Utility is able to recognize the anticipated cost benefits and savings to result from its efforts to improve customer service through implementation of specific initiatives to streamline business processes and deploy new technology;
  • The outcome of proceedings pending at the Federal Energy Regulatory Commission (FERC) and the California Public Utilities Commission (CPUC), including the Utility’s general rate case and the CPUC’s pending investigation into the Utility’s billing and collection practices;
  • 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, and the outcome of the CPUC's new rulemaking proceeding concerning the relationship between the California investor-owned energy utilities and their holding companies and non-regulated affiliates;
  • The impact of the recently adopted Energy Policy Act of 2005 and future legislative or regulatory actions or policies affecting the energy industry;
  • The outcome of the litigation pending against the Utility in California state court involving allegations of injury allegedly caused by exposure to chromium at certain of the Utility's gas compressor stations and other pending litigation;
  • Increased municipalization and other forms of bypass in the Utility’s service territory; and
  • Other factors discussed in PG&E Corporation's SEC reports.