PG&E Falls as Forecast Misses Estimates: S.F. Mover

PG&E Corp., California’s largest utility, fell the most in more than a year after forecasting earnings below analysts’ estimates on natural gas pipeline improvement costs after a deadly 2010 explosion.

The shares dropped 4 percent to $41.41 at the close in New York, the biggest decline since Aug. 8, 2011.

PG&E sees 2013 earnings from continuing operations between $2.55 a share to $2.75 a share, below the $2.79 average of 17 analysts’ estimates compiled by Bloomberg. The forecast includes the need to issue $1 billion to $1.2 billion of new shares to fund improvements to its gas system, the San Francisco-based company said in a statement today.

“There is still remaining uncertainty from the San Bruno incident and the costs that are coming from that,” Andrew Smith, a St. Louis-based analyst for Edward Jones, said in a telephone interview. “Investors would like to see some resolution and it is taking longer than they would like,” said Smith, who rates the company’s shares a hold and doesn’t own any.

The utility expects $400 million to $500 million in unrecoverable expenses for pipeline safety projects this year from the gas explosion in San Bruno, California, that killed eight people. PG&E’s allowed return on equity was also reduced to 10.4 percent, the company said.

PG&E Chief Executive Officer Tony Earley in a conference call today settlement talks with state regulators and other parties related to blast penalties broke down late last year and the company is now involved in resolving regulatory investigations into the pipeline rupture.

PG&E reported a fourth-quarter loss of $13 million, or 3 cents a share, compared with net income of $83 million, or 20 cents a share, from the same period a year ago. Excluding pipeline work and other one-time costs, earnings were 59 cents a share, in line with the average of 13 estimates compiled by Bloomberg.