PG&E Corporation (PCG): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:
PG&E Corporation's fourth-quarter and full-year 2013 earnings per share surpassed the Zacks Consensus Estimate. On a year-over-year basis, quarterly earnings edged down primarily due to decreases in regulated return on equity and debt compared to last year and a rise in share counts. However, top line increased year over year and surpassed the Zacks Consensus Estimates primarily on the heels of higher Electric and Natural Gas revenues. A steady improvement in cash position, addition of customers at regular intervals and a stable dividend payment history are expected to act as catalysts for the company's future growth. These positives, however, will be partially offset by accidental charges at San Bruno, stringent utility regulations and severe weather patterns. Thus, we have maintained our Neutral recommendation on the stock.

Overview:

San Francisco, Calif.-based PG&E Corporation is the parent holding company of California's largest regulated electric and gas utility, Pacific Gas and Electric Company (Pacific Gas). As of Dec 31, 2013, Pacific Gas serves approximately 5.2 million electricity and around 4.4 million natural gas customers in northern and central California. The utility generates revenues mainly through the sale and delivery of electricity and natural gas to customers. It engages in the business of electricity and natural gas distribution electricity generation, procurement, and transmission and natural gas procurement, transportation, and storage. The utility also operates hydro-electric, nuclear and fossil-fueled power plants. At the end of Dec 31, 2013, the company owned a total generating capacity of 7,677 megawatt MW. Of this, 2,240 MW were nuclear, 3,882 MW came from hydro-electric sources, 1,403 MW from fossil-fuel units, and 152 MW from photovoltaic sources.

The utility owns approximately 18,115 circuit miles of interconnected transmission lines operated at voltages of 500 kV to 60 kV and transmission substations with a capacity of approximately 62,289 megavolt ampere (MVA). Electricity is transmitted across these lines and substations and is then distributed to customers through approximately 141,000 circuit miles of distribution lines. The utility delivers 86,513 GWh to its customers. The utility is interconnected with electric power systems in the Western Electricity Coordinating Council, which includes many western states, Alberta and British Columbia, Canada, and parts of Mexico.

The utility's natural gas system consists of approximately 42,559 miles of distribution pipelines, approximately 6,000 miles of backbone and local transmission pipelines, and various storage facilities. PG&E procures natural gas directly from producers and marketers in both Canada and the United States. The utility is regulated primarily by the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC). Apart from these Nuclear Regulatory Commission NRC oversees the licensing, construction, operation, and decommissioning of the utility's nuclear generation facilities.

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