Updated from 2:47 p.m. ET
Pacific Gas & Electric
, the struggling unit of
, said today it was unable to borrow more money and faces the risk of "being forced into bankruptcy."
PG&E also said today it wouldn't pay a fourth-quarter dividend and that it planned to delay reporting its fourth-quarter results.
In an 8-K filing with the
Securities and Exchange Commission
, California's largest utility, which is based in San Francisco, said that "public health and safety would be jeopardized" if it couldn't maintain its transmission lines, distribution lines, power plants, gas distribution facilities and other facilities. However, Pacific Gas said it "was unclear" how the company could purchase electricity and gas from suppliers given the financial situation.
Pacific Gas said its cash reserves totaled about $500 million as of Jan. 10. The company owes the
California Independent System Operator
$583 million for energy purchases, an amount due on Feb. 1. The company owes another $1.2 billion, due March 2, for purchasing power last December. The utility also owes an estimated $431 million to the
California Power Exchange
, which is due on Feb. 15, covering power purchases.
Pacific Gas also said the recent rate increase approved by the
California Public Utilities Commission
a week ago won't raise enough cash for the company to pay its bills.
California has been facing an electricity crisis, marked by near-blackouts, due to tight supplies and soaring wholesale prices for electricity. U.S. Treasury Secretary Lawrence Summers led marathon negotiations that ended late Tuesday night with California lawmakers, utility executives and out-of-state power generators.
A second round of talks will reportedly continue all day Wednesday, in a quest to resolve the crisis and prevent the bankruptcy of Pacific Gas and its rival
Southern California Edison
, a unit of
Following the regulatory filing, PG&E issued a statement saying it wouldn't pay its fourth-quarter common stock dividend of 30 cents, which would have been payable on Jan. 15. The company also said its utility subsidiary wouldn't declare its stock dividend for the three-month period ending Jan. 31, nor pay the $110 million dividend to the parent company.
PG&E, which plans to evaluate its ability to pay future dividends on a quarter-to-quarter basis, will also postpone its fourth-quarter earnings report, pending "the outcome of ongoing state and federal efforts to resolve the crisis." The company said "the results of these efforts could significantly affect the corporation's results for the quarter and for last year as a whole."
First Call/Thomson Financial
, analysts on average are expecting fourth-quarter earnings of 40 cents a share, down from 81 cents a share a year ago, and full-year earnings of $2.55 a share, compared with 1999 earnings of $2.24 a share.
In addition, PG&E said it has introduced cost-cutting moves, including deferring annual salary increases for all of its nonunion employees, suspending charitable contributions and reducing other expenditures.
Shares of PG&E closed at $13.56, up 6 cents, or 0.5% on the
New York Stock Exchange
, while Edison International ended the trading day at $11.25, after gaining 13 cents, or 1.1% in composite trading.
Several large U.S. banks, notably
Bank of America
, have been dogged recently by concerns about their loan exposure to the California utilities.