PG&E profits soared in Q4
Utility earned $675M amid rising gas bills for residential customers
SAN FRANCISCO — PG&E profits soared in the fourth quarter, an increase powered primarily by the favorable timing of a rate case and sharp rises in customers’ gas bills.
The embattled utility, which now is a convicted felon after being found guilty of crimes it committed before and after a fatal explosion in San Bruno, earned $675 million in the October-through-December quarter. That was more than double the profits of $247 million for the year-ago fourth quarter.
“The increase in quarterover-quarter earnings from operations reflected additional authorized revenue as a result of the 2015 gas transmission and storage rate case, timing-related tax items, the impact of a nuclear refueling outage in the prior period, and growth in rate base earnings,” PG&E said in its earnings release Thursday.
On Aug. 1, average gas bills for typical residential customers jumped $6.80 a month, or
14 percent. The increase in gas costs wasn’t particularly noticeable until customers sought to heat their homes more often during cold weather.
After gas and electricity monthly bills increased again on Jan. 1, some ratepayers began complaining of major increases in monthly PG&E bills, including some that doubled from prior months.
San Francisco-based PG&E earned $1.41 billion for all of 2016, up 58.4 percent from profits in 2015 of $888 million. Revenue totaled $17.67 billion, up 4.9 percent from the year before.
Electricity revenue in 2016 totaled $13.86 billion, a 1.5 percent increase from the year before. Natural gas revenue totaled $3.8 billion, up 19.7 percent from 2015.
In August, a federal jury convicted PG&E on six felony counts in a case that arose from the San Bruno explosion that killed eight and destroyed a residential neighborhood.
In January, PG&E was branded a convicted felon after receiving the maximum sentence for the halfdozen convictions.
The fourth-quarter operating profits of $1.33 a share beat analysts’ estimates. Wall Street had predicted a profit of $1.30.
The utility also told investors that it expects profits during 2017 will range from $3.48 to $3.77 per share. Earnings that exclude certain one-time items are expected to be in the range of $3.55 to $3.75 per share.
“With the resolution of the gas rate case, our attention now turns to the electricity business, which appears to be growing at a nice clip,” said Travis Miller, director of utilities research with investment firm Morningstar. “The company’s decision earlier this year to raise its dividend is a tangible sign that PG&E has put the San Bruno case and the gas system issues behind it.”
In that same vein, PG&E told analysts Thursday during a conference call that it envisions great opportunities from California’s green energy quest.
“Management continues to highlight investment opportunities levered to California’s low carbon policy focus, more specifically a potential role for PG&E to facilitate lower transportation emissions by building-out electric vehicle charging infrastructure,” Shahriar Pourreza, an analyst with Guggenheim Securities, wrote in a research note Thursday.
PG&E shares rose 0.7 percent and closed at $63.39 on Thursday. The shares have risen 4.3 percent so far in 2017.
The company made clear that it is attempting to push past the convictions, crimes, fines, penalties and distrust that arose out of the explosion.
“The San Bruno incident has fundamentally changed the way we operate this company,” Anthony Earley, PG&E’s chief executive officer, told analysts during the call.