Zacks_Analysts' Blog : PG&E Corporation Revises Rates - Analyst Blog

Pacific Gas and Electric Company, a unit of PG&E Corporation (PCG), lowered its average system-wide bundled electric rate by 0.8% from January 2011. The decline in rates was due to lower energy purchase prices, which offset the higher operating costs of the company.

The rate decline will benefit those consumers who use a minimum of 850 kilowatt hours (kWh) or more of energy in a month. The average consumer using 850 kWh per month will find his/her monthly energy bill dip by 1.1%, while a consumer using 2,000 kWh of energy will find the monthly bill decline by 2%.

Taking into account the additional transmission-related costs and the utility's 2011-2013 General Rate Case (GRC) revenue requirements, the company has plans to increase the rates marginally in March 2011. Even allowing for the rate hike, the expected energy bills will still be lower than year-ago rates by 2.3%.  However, the actual bill of the consumers will differ depending upon usage.

During the third quarter earnings call, the company provided non-GAAP earnings expectation of $3.35 to $3.50 per share in 2010 and $3.65 to $3.80 per share in 2011. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are, respectively, 75 cents per share, $3.43 per share and $3.71 per share.

PG&E Corporation currently retains a Zacks #3 Rank (short-term Hold rating) in consonance with our Neutral rating on the stock. On a competitive landscape, operating margin of the company fared better than its peers Edison International (EIX) and Sempra Energy (SRE) in the trailing twelve months.

Based in San Francisco, California, PG&E Corporation distributes electricity and natural gas primarily in northern and central California.