PG&E said Tuesday its profits jumped during the first quarter of 2017, a surge for its bottom line that coincided with spikes in natural gas bills for many customers during a harsh winter.
The San Francisco-based utility said cost cuts, including layoffs, announced earlier this year are only the beginning of a cost-cutting drive aimed at maintaining affordable service for customers — yet it acknowledged that more potential rate increases are already in the works.
During the January-through-March quarter, PG&E captured $576 million in net profit, five times higher than its net profit in the year-ago first quarter. The year-ago profits were undermined by multiple one-time items, including $381 million in charges for the deadly 2015 Butte wildfire in the Gold Country and charges of $87 million linked to a state Public Utilities Commission ruling, which stemmed from a fatal 2010 pipeline explosion in San Bruno.
PG&E is a convicted felon after being sentenced on six charges for crimes the utility committed before and after the lethal San Bruno blast, which killed eight people.
Per-share operating profits that excluded certain one-time items were $1.06 a share, which easily topped Wall Street’s forecast of 81 cents. Operating profits totaled $544 million, up 33.7 percent from a year ago.
Revenue totaled $4.27 billion, a 7.4 percent increase from the same quarter a year ago.
Gas revenue in the first three months of 2017 totaled $1.2 billion, a huge jump of 42.7 percent from a year ago.
Electricity revenue totaled $3.07 billion in the first quarter, a 2.1 percent decrease from the similar period in 2016.
PG&E shares rose 0.5 percent Tuesday and ended the trading session at $66.81.
So far in 2017, PG&E stock has jumped 9.9 percent, well ahead of the 5.8 percent gain for the S&P Utilities Index.
Despite the utility’s boost in gas revenue after rates rose in winter, PG&E said customers can expect even higher electricity and gas bills in the years to come.
“The rate base impact will probably be 2019 and beyond” for PG&E customers, Jason Wells, PG&E’s chief financial officer, told analysts during a conference call Tuesday.
The company is awaiting state PUC decisions on the potential electricity and gas rate increases, and a separate decision by federal regulators on electricity transmission rates.
Higher monthly bills are among the factors that will help PG&E fatten its profits, an analyst said.
“We see strong capital spending, rate increases and cost-control efforts helping to drive profit growth,” Christopher Muir, an analyst with CFRA Research, said in a note about the PG&E financial results.
Consumer advocates oppose any additional rate hikes.
“It is time to ask for a PG&E rate freeze or rate reduction,” said Mark Toney, executive director with The Utility Reform Network, a consumer group. “It’s amazing that people have to be prepared for more rate increases on the heels of these enormous profits. It’s the customers who pay the bills that create these profits, and some of these profits should be returned to the ratepayers.”
Either way, the utility said its cost cuts will continue.
In January, PG&E launched cost cuts that included eliminating 450 jobs, although the net effect was a loss of 390 positions after about 60 workers were transferred to other positions within the company.
“Earlier this year, we announced $300 million in cost-efficiency measures for 2017,” Geisha Williams, PG&E’s chief executive officer, said during the conference call with analysts. “We’re on track to achieve the savings this year. This effort should be viewed as a first stop in an ongoing focus on maintaining affordable service for our customers.”
Those cuts included a loss of 132 jobs in San Francisco, where PG&E is based, and 112 jobs in the East Bay, including 94 in San Ramon.
“We are on a journey to continue to drop costs out of our business,” Williams said. “You can expect to see more of that in the years to come.”