PG&E (NYSE:PCG) reported weaker-than-expected second-quarter earnings as legal expenses related to a deadly pipeline explosion from two years ago continued to rack up and the company spent more money on installing safety mechanisms on pipelines.
The San Francisco gas and electric utility reported net income of $235 million, or 55 cents a share, compared with a year-earlier $362 million, or 91 cents.
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The company attributed the decline to legal costs related to the 2010 San Bruno pipeline explosion that killed eight people, recent regulatory decisions and a $128 million, or 18-cent, pre-tax charge related to pipeline safety work and strength testing.
“We’re following through on our commitments to improve system safety and reliability,” PG&E chief executive, Tony Earley said in a statement. “Our major priorities continue to be resolving outstanding gas-related issues, positioning the company for long-term success and rebuilding relationships with our stakeholders.”
Excluding one-time items, PG&E earned 81 cents, missing average analyst estimates in a Thomson Reuters poll by a penny.
Revenue for the three-month period was $3.59 billion, down from $3.68 billion a year ago, below the Street’s view of $3.95 billion. Slight gains in PG&E’s electric unit were partially offset by declines in natural gas sales and higher costs of electricity.
Looking ahead to the remainder of the year, PG&E reaffirmed its earlier provided non-GAAP view in the range of $3.10 to $3.30 a share, which brackets average estimates of $3.18.
However, the company narrowed its GAAP forecast to $1.83 to $2.41 from an earlier $1.80 to $2.49, citing money it is putting aside for third-party liability related to the 2010 explosion.
Hearings over the PG&E explosion from two years ago in the San Francisco suburb that left dozens injured remain ongoing. Last week, a senior engineer at PG&E testified that he warned his supervisors before the explosion of errors in gas line records but they did noting about it.