PG&E Corporation’s (PCG) adjusted operating earnings per share of 53 cents in the fourth quarter of 2014 missed the Zacks Consensus Estimate of 54 cents by a penny. The reported figure, however, increased 26.2% from 42 cents a year ago.
The earnings upside was due to the impact of expense recovery authorized in the utility’s 2014 General Rate Case.
GAAP earnings during the quarter were 27 cents per share compared with 19 cents in the year-ago quarter.
In 2014, adjusted earnings came in at $3.50 per share, in line with the Zacks Consensus Estimate and upfrom $2.72 per share in the prior year.
Revenue Update
PG&E’s quarterly revenues increased 8.4% to $4,308 million from $3,975 million in the year-ago period. Revenues also surpassed the Zacks Consensus Estimate of $3,897 million.
2014 revenues stood at $17,090 million, an increase of 9.6% year over year. The reported figure also beat the Zacks Consensus Estimate of $16,534 million.
The Electric business generated revenues of $13,658 million in 2014 (up 9.3% year over year), while Natural Gas clocked revenues of $3,432 million (up 10.6%).
Expenses
Total operating expenses were $14,640 million, up 5.8% from $13,836 million in the year-ago quarter. This was due to higher depreciation, amortization and decommissioning expenses along with higher cost of electricity.
Guidance
The utility did not provide any guidance for 2015 due to the pending final decision in the gas penalty proceedings.
At the Peer End
American Electric Power Company Inc. (AEP) reported fourth-quarter 2014 operating earnings of 48 cents per share, missing the Zacks Consensus Estimate of 52 cents by 7.7%. The quarterly figure also moved downward from the year-ago profit of 60 cents per share by 20%.
CMS Energy Corp. (CMS) reported fourth-quarter 2014 earnings per share of 35 cents on an adjusted basis. Quarterly earnings lagged the Zacks Consensus Estimate by a penny and declined 5.4% from the year-ago figure of 37 cents.
NextEra Energy, Inc. (NEE) announced fourth-quarter 2014 adjusted earnings of $1.03 per share, missing the Zacks Consensus Estimate of $1.04 by just a cent. On a year-over-year basis, earnings climbed 8.4% on the heels of higher revenues across all segments.
Zacks Rank
Currently, PG&E carries a Zacks Rank #3 (Hold).
Pacific Gas has completed a system-wide replacement of old cast iron gas pipelines across northern and southern California on schedule. In a major milestone, the utility replaced 874 miles of iron gas pipelines in its 70,000 square-mile service area by year-end 2014.
The old gas distribution cast iron pipelines were installed decades ago, which were subject to natural wear and tear and led to leakage and pipeline accidents. In fact, PG&E faces a $1.4 billion fine for a gas pipeline explosion in a San Francisco suburb that killed eight people in 2010. The penalty has however not been finalized.
Sensing the importance of replacing the obsolete pipelines, PG&E initiated its Gas Pipeline Replacement Program. The utility set itself a goal of replacing 30 miles of cast iron pipeline per year. The removal of the cast iron pipelines will certainly lower the possibility of fatal accidents.
It is worth mentioning here that the San Bruno accident continues to cast a shadow on the company’s financial results. PG&E said that penalties as well as upgrades may cost shareholders about $4.75 billion. This includes the $2.7 that billion PG&E has already committed for safety-related work following the San Bruno incident over the next several years.
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