http://www.boston.com/dailynews/107/nation/PG_E_Corp_puts_positive_spin_o:.shtml

PG&E Corp. puts positive spin on $4.1 billion loss

By Michael Liedtke, Associated Press, 4/17/2001 23:03

SAN FRANCISCO (AP) Top executives at PG&E Corp. say they hope to increase profits as much as 10 percent this year even though the company's California utility has filed for bankruptcy and caused a $4.1 billion fourth-quarter loss.

During a conference call Tuesday with analysts, PG&E Chairman Robert Glynn Jr. said the company remains open to the idea of spinning off its fast-growing unregulated business, the National Energy Group, in an initial public offering later this year.

National Energy, which generates and trades power outside of California, accounted for about 18 percent of PG&E's operating profit last year. The company expects the division to deliver up to 30 percent of its profits by next year.

''We remain very focused on finding a vehicle to get (National Energy's) value to our shareholders,'' Glynn told analysts during a conference call.

National Energy, based in Maryland, is now considered the company's most valuable asset. Some analysts think the unregulated business might be worth as much as $12 per share. PG&E's stock closed Tuesday at $8.90, up 6 cents on the New York Stock Exchange.

The California Public Utilities Commission is investigating allegations that PG&E built up National Energy at the expense of its now-bankrupt utility, Pacific Gas and Electric.

The utility has been battered by the state's energy crisis, absorbing billions in wholesale power costs it has not been able to pass on to ratepayers.

''The mess in California really overshadowed a good, solid operating performance by the company,'' Glynn lamented to analysts Tuesday.

Critics accuse the company of painting a grim picture for California's lawmakers and regulators, while putting out a positive spin for investors to preserve what value is left of its battered stock. The company's stock is 73 percent below its 52-week high of $32.50 reached last summer.

''They give a sob story in California and then it's like they stage a victory parade for Wall Street,'' said Doug Heller, consumer advocate for the Foundation for Taxpayer and Consumer Rights, a PG&E critic.

Meanwhile, Edison International reported a fourth-quarter loss of $2.5 billion on Tuesday, reflecting a deficit incurred by its subsidiary, Southern California Edison. The subsidiary has been nearly bankrupted by the state's energy crisis.

Excluding the writeoff of the utility's deficit, Edison International lost $28 million in the last three months of 2000, in contrast to earnings of $96 million for the fourth quarter of 1999.

The deficit reflects the difference between what Edison paid power generators through Dec. 31 and what it was able to collect from ratepayers.

Edison had been carrying the amount as an asset, expecting to recover those costs through higher rates.

-- Anonymous, April 18, 2001