01—Abstract
Summary
Summary of the 10-K filed February 17, 2011. Cited figures are marked; the original filing is the authoritative source.
PG&E Corporation and Pacific Gas and Electric Company filed this combined Form 10-K for the fiscal year ended December 31, 2010.
PG&E Corporation reported 2010 operating revenues of $13.84 billiona and income available for common shareholders of $1.10 billion, or $2.82 per diluted share, down from $1.22 billion ($3.20 per diluted share) in 2009. The results absorbed $168 million after-tax of charges for the September 9, 2010 San Bruno pipeline accident, which the filing describes as killing eight people and destroying at least 34 houses. The Utility recorded a $220 million provision for estimated third-party claims and says it may incur as much as $400 million for such claims, against liability insurance of approximately $992 million above a $10 million deductible; no insurance recoveries had been recorded at year-end.
Beyond San Bruno, the filing highlights several open regulatory matters. The NTSB and CPUC are investigating the accident, and the CPUC opened a formal investigation of a 2008 Rancho Cordova gas explosion, stating that it is likely to impose penalties. The Utility's 2011 General Rate Case settlement, which would increase 2011 revenue requirements by $395 millionb, remains pending before the CPUC.
The filing also reports a Utility Diablo Canyon cooling-water issue that could require cooling towers costing as much as $4.5 billionc, and a SmartMeter program with a $2.3 billion cost cap and a $36 million provision for costs expected to exceed it. Financially, the Utility had approximately $45.7 billion in assets and 2010 capital expenditures of $3.8 billion, with 2011 capital expenditures expected at about $3.7 billion. The Utility's dividend-restriction disclosures note $9.7 billion of its net assets are restricted from transfer to PG&E Corporation, and the company's quarterly common dividend was $0.455 per share.
02—Key points
Key Highlights
- PG&E Corporation 2010 operating revenues of $13.84 billion, versus $13.40 billion in 2009.
- Income available for common shareholders of $1.10 billion ($2.82 diluted EPS), down from $1.22 billion ($3.20) in 2009; the filing attributes $168 million after-tax of San Bruno costs to earnings from operations exclusions.
- San Bruno accident (September 9, 2010): eight deaths; Utility recorded $220 million provision and estimates up to $400 million for third-party claims, against about $992 million of liability insurance above a $10 million deductible.
- Pending CPUC formal investigation of the Rancho Cordova accident, with the Utility's own report stating it agrees with the NTSB on probable cause and the CPUC stating it is likely to impose penalties.
- 2011 GRC settlement proposes a $395 million increase in Utility revenue requirements for 2011; the CPUC has not yet approved it.
- Capital expenditures of $3.8 billion in 2010 and an expected $3.7 billion in 2011; quarterly common dividend of $0.455 per share.
- Diablo Canyon once-through cooling policy could require cooling towers costing as much as $4.5 billion, and the filing says the Utility believes that cost would be "wholly out of proportion."
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 17, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $13.84B$13.40B | +3.3% |
| Operating Income | $2.31B$2.30B | +0.4% |
| Interest Expense | $684.00M$705.00M | −3.0% |
| Net Income | $1.10B$1.22B | −9.9% |
| EPS (Basic) | $2.86$3.25 | −12.0% |
| EPS (Diluted) | $2.82$3.20 | −11.9% |
| Shares Outstanding (Basic) | 382.00M368.00M | +3.8% |
| Shares Outstanding (Diluted) | 392.00M386.00M | +1.6% |
05—Questions
Frequently Asked Questions
How much did the San Bruno accident cost the company in 2010?
The Utility recorded $283 million of San Bruno-related costs in 2010, including a $220 million provision for estimated third-party claims and $63 million for immediate community support, re-inspection of transmission lines and other activities. The filing says $168 million after tax was excluded from earnings from operations. The Utility estimates it may incur as much as $400 million for third-party claims and expects $200 million to $300 million of related costs in 2011.
Is the San Bruno liability expected to be covered by insurance?
The filing says PG&E Corporation and the Utility currently consider it likely that most third-party claim costs will be covered by liability insurance of approximately $992 million above a $10 million deductible. No insurance recoveries were recorded as of December 31, 2010, and the company says it cannot predict the amount or timing of recoveries.
What regulatory decisions are pending that could affect future revenue?
The CPUC has not yet approved the settlement in the 2011 General Rate Case, which proposes a $395 million increase in 2011 revenue requirements and attrition increases of $180 million in 2012 and $185 million in 2013. The 2011 Gas Transmission and Storage rate case, including a new safety phase, is also pending, with final decisions anticipated in the first or second quarter of 2011.
What dividend and capital commitments did the company report?
On February 16, 2011, the Board declared a quarterly dividend of $0.455 per share, payable April 15, 2011. The Utility expects capital expenditures of about $3.7 billion in 2011, after $3.8 billion in 2010. Restrictions on dividends include a 65% debt-to-capitalization covenant and the CPUC's 52% equity requirement, and $9.7 billion of the Utility's net assets are restricted from transfer to PG&E Corporation.
06—Continue