PG&E’s profit tumbles in Q2

SAN FRANCISCO — PG&E’s second-quarter profit tumbled, the utility reported Thursday, but its bottom line soon could be bolstered as a big increase in residential natural gas rates kicks in next week.

The utility told analysts during a Thursday conference call that residential customers soon will see a jump in their monthly statements. Those bills should begin arriving Monday.

The earnings results, which fell short of Wall Street’s estimates, come as a jury deliberates in the utility’s federal criminal trial for its role in the 2010 San Bruno pipeline explosion.

Huge challenges — including a potential fine of up to $562 million if found guilty and the

unknown effects of future regulatory decisions — lie ahead for the utility.

PG&E earned $206 million for the quarter that ended in June. That was down 48.8 percent from profit of $402 million in the year-ago quarter. PG&E earned 41 cents a share, down from 83 cents in the second quarter of 2015.

Excluding one-time items, earnings from operations were 66 cents a share. But those were well below analysts’ predictions of 94 cents a share.

“Our focus on operational excellence drove solid results,” Anthony Earley, PG&E’s chief executive, said.

The profit picture could soon improve. A Public Utilities Commission decision in June cleared the way for PG&E to impose sharply higher monthly gas bills on its customers.

By 2018, gas bills will be 11.6 percent higher than they were in January 2015. The vast majority of that increase is expected to be in effect in August.

In January 2015, average residential gas bills were $50.89. By 2018, the average monthly bill is projected to rise to $56.79.

San Francisco-based PG&E told analysts it will file rate-increase proposals for electricity Friday.

PG&E listed several expenses in the second quarter, including $172 million in PUC penalties for causing the San Bruno blast and a probe into its record-keeping errors.

Despite the uncertainties, PG&E offered a brighter outlook.

PG&E predicted that its full-year profit will range from $2.83 to $3.15 a share. Previously, the company had predicted profit for 2016 would range from $2.41 to $2.73 a share.

Shares of PG&E slipped by 0.3 percent and closed at $63.75 Thursday.

The utility clearly preferred to look beyond the deluge of regulatory and legal proceedings stemming from the San Bruno explosion.

“We expect to resolve these lingering issues by 2017,” Jason Wells, PG&E’s chief financial officer, told analysts.

Wall Street is anxious for some closure on the ongoing regulatory and legal uncertainties that have eroded PG&E profits, Greg Gordon, an analyst with Evercore ISI, said in comments to management during the conference call.

“Investors just want to understand what the real earnings power of the company is,” Gordon said. “We have to get through some of these complex issues first.”

Earley said PG&E wouldn’t comment extensively about the criminal trial.

“We continue to believe that no PG&E employee knowingly and willfully violated the law,” Earley told analysts. “Now it’s in the hands of the jury.”