SAN FRANCISCO — PG&E Corporation’s (NYSE: PCG) third-quarter 2017 net income after dividends on preferred stock (also called “income available for common shareholders”) was $550 million or $1.07 per share, as reported in accordance with generally accepted accounting principles (GAAP). This compares with $388 million, or $0.77 per share, for the third quarter of 2016.
The quarter-over-quarter increase reflects lower expenses primarily due to the absence of disallowed charges related to the San Bruno Penalty Decision, which impacted the third quarter of 2016, and also due to insurance proceeds in the third quarter of 2017 related to the court-approved settlement of the shareholder derivative suit, with no similar amount in 2016.
GAAP results include items that management does not consider part of normal, ongoing operations (items impacting comparability), which totaled $39 million pre-tax, or $0.05 per share, for the quarter. For the third quarter of 2017, these included third-party claims and legal costs associated with the Butte fire, which were partially offset by accrued insurance recoveries. Other items included costs for work to clear pipeline rights-of-way, legal and regulatory costs related to regulatory communications, and the net benefit of proceeds from insurance related to the court-approved settlement of the shareholder derivative suit.
In addition to reviewing third-quarter financial results on today’s earnings call, PG&E will also provide an update on the company’s response to the recent Northern California wildfires.
PG&E Corporation CEO and President Geisha Williams said: “This is a very difficult time for our customers affected by the recent devastating wildfires, and they continue to be in our thoughts and prayers. We recognize that PG&E is going to play a vital part in helping these communities rebuild and recover. We are committed to working together and supporting them throughout that process. We also remain focused on continued investment in vital infrastructure and technology to increase the resilience and the sustainability of California’s energy economy for the future.”
Northern California Wildfires Response
PG&E worked with first responders and local communities to safely restore approximately 360,000 electric customers and 42,000 gas customers who lost service during the recent Northern California wildfires. Fueled by extraordinary winds and unusually dry conditions, the numerous fires resulted in the loss of 43 lives and burned thousands of homes and businesses in several counties. PG&E has committed more than $3 million to date in assistance to the local communities affected by the fires.
In those instances where Cal Fire investigators or PG&E identified a site potentially involving our facilities, PG&E submitted incident reports to the California Public Utilities Commission (CPUC). These reports are factual in nature and do not reflect a finding of cause. The company is fully cooperating with Cal Fire and the CPUC in their investigations of these fires.
PG&E maintains a robust vegetation management program to prevent trees and other vegetation from contacting the company’s equipment. Beginning in 2016, the company approximately doubled its previous spending on line clearing and tree removal to respond to the tree mortality crisis in California. The company also enhanced its mitigation efforts with additional patrols of high-risk areas using a combination of aerial surveillance, foot patrols and LiDAR technology.
Earnings from Operations
On a non-GAAP basis, excluding items impacting comparability, PG&E Corporation’s earnings from operations in the third quarter of 2017 were $578 million, or $1.12 per share, compared with $471 million, or $0.94 per share, in the third quarter of 2016. The increase reflected growth in rate base earnings, as well as positive impacts related to the timing of taxes, the timing of operational spending, and the timing of the phase-two decision in the 2015 GT&S rate case. These were partially offset by the loss of certain tax repair benefits in the 2017 GRC.
PG&E Corporation is updating 2017 guidance for projected GAAP earnings in the range of $3.36 to $3.56 per share primarily due to the reinstatement of the company’s liability insurance following the Northern California wildfires, as well as an increase in the expected third-party claims associated with the Butte fire, partially offset by accrued insurance recoveries. On a non-GAAP basis, the guidance range for projected 2017 earnings from operations remains unchanged at $3.55 to $3.75 per share, which assumes no material financial impact from the Northern California wildfires beyond the direct restoration and repair costs, the insurance reinstatement and some legal expenses.
Guidance is based on various assumptions and forecasts, including those relating to future authorized revenues, expenses, capital expenditures, rate base, equity issuances, and certain other factors. PG&E Corporation discloses historical financial results and provides guidance based 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 impacting comparability. See the accompanying tables for a reconciliation of earnings from operations to consolidated income available for common shareholders.
Supplemental Financial Information
In addition to the financial information accompanying this release, presentation slides for today’s conference call with the financial community have been furnished to the Securities and Exchange Commission (SEC) and are available on PG&E Corporation’s website at: http://investor.pgecorp.com/financials/quarterly-earnings-reports/default.aspx.
Email Currents at Currents@pge.com.