SAN FRANCISCO – Pacific Gas & Electric has issued a report on its 2008 earnings.

PG&E's consolidated net income for the year ended December 31, 2008, reported in accordance with generally accepted accounting principles (GAAP), was $1.34 billion, or $3.63 per share, compared with $1 billion, or $2.78 per share, in 2007. Per-share earnings on a GAAP basis in 2008 include income from a settlement of 2001-2004 tax audits, totaling $257 million or $0.68 per share.

On a non-GAAP earnings from operations basis, which excludes the benefits of the tax settlement, PG&E Corporation's results in 2008 were $2.95 per share, compared with $2.78 per share in 2007.

For the fourth quarter of 2008, PG&E Corp.'s consolidated net income was $517 million, or $1.37 per share, reflecting the benefits of the tax settlement. This compares with $203 million, or $0.56 per share, in the same quarter of 2007.

On a non-GAAP earnings from operations basis, PG&E Corp.'s results in the fourth quarter of 2008 were $0.70 per share, compared with $0.56 per share in the fourth quarter of 2007.

The year-over-year increase in earnings from operations primarily reflects earnings from higher authorized capital investments in utility infrastructure and energy efficiency incentive revenues, partially offset by higher expenses due to storm-related outages, natural gas system maintenance activities, and the extended outage to replace the steam generators at one unit of the Diablo Canyon nuclear generating facility.

"Our results for 2008 were in line with our commitments to investors and continue to support our longer-term earnings growth targets," said Peter A. Darbee, Chairman, CEO and President of PG&E Corporation. "Looking ahead, we are confident that we are well positioned to continue making the needed investments to strengthen energy reliability and services for our customers."

Earnings guidance

PG&E Corp. reaffirms guidance for 2009 earnings from operations in the $3.15-$3.25 per share range.

Guidance assumes that Pacific Gas and Electric Co. maintains a ratemaking capital structure of 52 percent equity, that it maintains its California Public Utilities Commission (CPUC)-authorized return on equity of 11.35 percent and achieves at least a 12 percent return on equity on its Federal Energy Regulatory Commission jurisdictional assets, while growing its asset base in line with its forecast, that it earns sufficient incentive revenues for energy efficiency achievements with an anticipated CPUC decision before the end of 2009, and that the Utility realizes planned operational and cost efficiencies.

Guidance excludes three anticipated items impacting comparability forecast to total between $0.05 and $0.11 per share.

The three items are: expected benefits of a settlement of refund claims for the 1998 and 1999 tax years that are anticipated to be finalized this year; forecasted recovery of hydroelectric divestiture costs incurred by the utility in 2000 and 2001 in connection with the proposed divestiture of its hydroelectric generation facilities; and forecasted costs to accelerate the completion of natural gas system integrity surveys and associated remedial work.

When added to earnings from operations, the net effect of these items impacting comparability results in 2009 GAAP earnings per share guidance of $3.20 to $3.36.

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