Utility Gains Eroded in Quarter

The parent companies of California’s largest natural gas and electricity utilities said Wednesday that solid utility earnings were eroded by other factors.

San Diego-based Sempra Energy, owner of Southern California Gas Co. and San Diego Gas & Electric Co., said first-quarter profit rose 13% as a tax-related gain more than offset a drop in earnings from commodities trading. San Francisco-based PG&E; Corp., parent of Pacific Gas & Electric Co., said quarterly net income fell but operating earnings rose. Both companies reaffirmed their outlooks for the year.

Sempra posted net income of $223 million, or 92 cents a share, up from $197 million, or 85 cents, a year earlier. Sales rose 14% to $2.69 billion.

The company recorded a gain of $59 million from the resolution of federal and state tax issues from previous years. Profit fell 49% to $29 million at the commodities unit, which accounted for more than a third of the company’s record earnings last year. The unpredictability of trading makes the unit’s performance difficult to assess, analysts said.

Excluding the gain, Sempra earned 68 cents a share, said Debra Bromberg, an analyst at Jefferies & Co. in New York. Analysts surveyed by Thomson First Call had expected 88 cents a share on that basis.

Combined profit from the company’s utilities rose 21% to $128 million. Sempra, which is seeking to build coal-fired power plants in Nevada and Idaho, said profit from its power-generation unit rose 31% to $46 million as it sold more electricity in Texas.

The company said it expected to meet its 2005 target for overall profit of $3.10 to $3.30 a share.

Sempra shares fell 98 cents, or 2.4%, to $39.50 on the New York Stock Exchange.

PG&E; Corp. said first-quarter net income fell to $218 million, or 54 cents a share, from $3.03 billion, or $7.15, for the same period last year. The 2004 quarter included a gain of $2.95 billion, or $6.96 a share, to recognize assets added to the utility unit’s balance sheet to help it emerge from Chapter 11 bankruptcy protection.

Excluding special items, PG&E; said, it earned 56 cents a share from operations in the quarter, up from 41 cents last year. The average earnings forecast of analysts polled by Thomson First Call was 50 cents a share.

Chief Financial Officer Chris Johns said on an analyst conference call that the rise in operating earnings primarily reflected the timing of a decision by California regulators related to the rates paid by the utility unit’s customers. The decision was made last May, so its benefits were not included in last year’s first-quarter results. Regulatory decisions boosted earnings by 15 cents a share, he noted.

The company said it still expected 2005 net income in the range of $2.07 to $2.20 a share. PG&E; also reaffirmed its forecast for next year’s earnings of $2.30 to $2.40 a share.

PG&E; shares rose 53 cents, or 1.5%, to $35.88 on the NYSE.