PG&E Corp (PCG) 2003 Q1 法說會逐字稿

Ladies and gentlemen, welcome to the PG&E Corporation first quarter earnings call.

At this time, I would like to introduce your leader, Mr. Gabe Togneri.

Go ahead, Mr. Togneri.

Well, thank you for joining us this morning.

A simultaneous, listen-only webcast is supplementing this call for the financial community, and as usual, a replay of the webcast will be available on the PG&E Corporation home page after the call.

This morning, in accordance with new SEC rules we issued an 8K with our press release and we're also providing our standard supplemental metric pages for the utility and for the NEG which are available on our web site.

We plan to file our 10-Q later today as well.

Bob Glynn, Chairman and CEO of PG&E Corporation and Peter Darbee, Senior Vice President and CFO, will be speaking today.

Gordon Smith, the President and CEO of Pacific Gas & Electric, Tom King, President of PG&E National Energy Group and other members of our team are also participating in the call.

To begin our call, here's Bob Glynn.

Good morning.

Thanks for being with us.

Today's call will begin by reporting Pacific Gas & Electric Company continuing to deliver solid operating results.

Our earnings release issued this morning highlights some of that company's additional accomplishments during the quarter.

PG&E National Energy Group also had strong operational performance at its IPP facilities and gas pipeline operations and the team at PG&E NEG continues to run that unit's assets efficiently and effectively notwithstanding the financial challenges that they are experiencing.

Peter Darbee will now take us through the quarter's financial results.

Thank you, Bob.

I would like to begin by highlighting a format change in our presentation of earnings.

To provide a clearer view of how earnings are tracking with our guidance, we're now including a separate subtotal for utility and holding company EPS from operations without headroom.

This is the basis for our current guidance.

To reconcile to GAAP, we then add headroom and items impacting comparability for these two segments to the subtotal which results in utility and holding company EPS on a reported basis.

And finally, adding the NEG results to that will result in a consolidated reported EPS for PG&E Corporation.

Now, let's review first quarter results following this format.

This will be followed by discussion of earnings guidance for the year 2003.

On a GAAP basis, PG&E Corporation reported a net loss of $354 million, or 93 cents per share for the quarter.

This compares to total reported earnings of $631 million or $1.71 per share for the first quarter of 2002.

A decline in GAAP earnings was driven by negative headroom for the quarter at the utility and charges related to the NEG restructuring.

And I'm going to comment on these two items shortly.

Also contributing to the differences was the positive impact last year of reversing approximately $350 million in after-tax ISO charges with no similar adjustment this year.

On a non-GAAP or earnings from operations basis, the utility and holding company reported $172 million or 45 cents per share for the first quarter without headroom.

This compares to $183 million or 50 cents per share for these two segments for the quarter last year.

By segment, earnings from operations for Pacific Gas & Electric were 45 cents per share, and that's basically flat relative to the 44 cents reported -- for the quarter a year ago.

For the holding company, earnings from operations were $1 million for the quarter compared with $23 million or 6 cents per share last year.

The difference was primarily due to lower consolidated tax benefits this year and a recognition of income due to the decline in mark-to-market value of outstanding NEG options last year.

As these options have now been exercised, there is no comparable change in value this year.

With regard to headroom for the quarter we, recorded a negative $181 million after tax, or 47 cents per share.

This compares to a positive $176 million or 48 cents per share for the quarter last year, and several factors accounted for the difference.

First, the DWR costs are higher this year, due to a higher remittance rate, changes in the methodology for calculating the DWR revenue, and the introduction of bond charges.

The changes in methodology for calculating DWR revenues resulted in ongoing -- an ongoing increase to reflect certain wholesale loads and one-time increase of $60 million after tax in revenue allocated to the DWR.

Second, the extended outage at unit two at Diablo Canyon resulted in more power procured from other sources and that reduced headroom as wall.

Finally, the milder than normal weather produced somewhat lower sales than we expected for the quarter and this resulted in lower overall billed revenues and lower headroom.

Important to point out that although we expect headroom to be significantly less in 2003, compared to 2002, we continue to estimate that it will be positive for the year.

You will recall that due to the seasonality of electric sales and rates, the first quarter is generally a low headroom quarter because rates and loads are lower at this time of the year.

Typically, we expect to record the most headroom during the second and third quarters, when we have higher sales and summer rates in place.

This was the pattern last year, with approximately 70% of headroom for the year recorded in the second and third quarters.

Now, you will remember that headroom is calculated residually and therefore it's difficult to forecast.

Actual headroom booked will depend on a number of factors that may change over the year, including sales, any changes to DWR remittances, natural gas prices, the size and cost of the remaining net open position, changes to other rate components, and changes in claims.

As a result, we may need to readjust our outlook as the year progresses.

Our outlook for headroom assumes current rates and the current DWR revenue requirements stay in place.

It also incorporates the potential impact of a GRC decision later this year.

Excluded from the results I described for the utility and holding company are items impacting comparability.

As in prior periods, these generally consist of higher interest and bankruptcy-related costs resulting from the California energy crisis.

Further detail on these items and a reconciliation of our non-GAAP and GAAP results can be found in our earnings release.

Now, let's turn to the NEG.

This segment is now being reported on a GAAP only basis.

Because of the ongoing NEG restructuring, we don't believe there's a meaningful basis for presenting earnings from operations relative to last year.

The NEG incurred a loss of $261 million or 69 cents per share.

For the quarter last year, the NEG earned $37 million or 10 cents per share.

While the underlying NEG assets continue to perform operationally, some additional restructuring charges were recorded during the quarter.

As stated previously, the bulk of these were recorded at the end of last year, but additional charges at the NEG were expected.

Included in the NEG loss is a charge to earnings of $175 million pretax related to the Attalla Tolling Agreement and this was consolidated the NEG's books during the quarter.

A $33 million pretax charge was also recorded to reflect the proposed settlement of all pending disputes among the Shaw Group related to Harquahalla and Cobert projects.

The NEG IPP plants and gas pipeline segment continue to contribute to stable results.

The pipeline business recorded $16 million or 4 cents per share for the quarter and that was in line with expectations.

Now, for 2003 guidance, for earnings from operations, our guidance remains at $1.90 to $2 per share for the utility and holding company combined, without headroom and without the NEG.

As we've discussed previously, while the NEG restructuring efforts continue, it's -- it simply is not practical to provide guidance for this business at this time.

And with that said, I would now like to turn it back over to Bob.

Thanks, Peter.

Now we'll provide an update on Pacific Gas & Electric Company's Chapter 11 proceeding and the restructuring process underway at PG&E National Energy Group and we'll begin with Pacific Gas & Electric.

Back on March 11th, shortly after our last earnings call, the bankruptcy court issued a 60-day stay in the confirmation hearings to allow for a judicially supervised settlement conference under Judge Newsome.

And on April 23, the bankruptcy court extended that stay for an additional 30 days and has currently scheduled a status conference for June 16th.

We're participating actively in the settlement conference.

The parties there were ordered to keep the process confidential and we're respecting that order.

Turning to the restructuring at PG&E National Energy Group, in the first quarter, we completed the sale of Energy Trading Canada.

We reached an agreement with lenders to extend the transfer date of the Gen Holdings Facility from March 31st until June 30th and we reached an understanding with the Shaw Group for them to complete construction of the Harquahalla and Cobert generating plants.

Also during the first quarter, PG&E National Energy Group made significant progress in reducing its energy trading operations and as of March 31st, the trading book has been reduced by about 60% compared to the end of October of last year.

As you know, since last November, PG&E National Energy Group has been operating while in default of its major lending facilities, and we've been working with lenders to reach an agreement on restructuring that business.

The very fact that these discussions have continued for this length of time is a reflection of both the parties' desire to reach an agreement, as well as the difficulties in doing so.

Working with the large group of more than 40 banks and public bond holders is a complex project.

And while these discussions are continuing, no agreement has been reached yet, and we can't assure that one will be reached.

We currently believe that it is inevitable that any restructuring of the PG&E National Energy Group would be implemented through a Chapter 11 proceeding.

Whether or not it's implemented in cooperation with the NEG lenders and whether or not PG&E Corporation would retain ownership of the National Energy Group after such a proceeding.

And here's the facts that have led us to make this statement: NEG is currently in default under various recourt debt agreements and equity guaranteed commitments totaling $2.9 billion.

The NEG has essentially no encumbered assets that can be pledged to secure additional financing.

Although NEG and its subsidiaries are continuing to abandon, sell or transfer additional assets in order to maximize cash and reduce liabilities, these efforts aren't expected to restore the companies or the subsidiary's financial condition.

And also, the six-months of discussions really underscore how challenging the issues of the multiple parties are and the court is well suited to address these types of challenges.

It's appropriate to highlight several points.

First, no decision has been made with respect to the timing of a chapter 11 filing for NEG; although, it could occur as early as the current quarter.

Second, we continue to believe that the NEG has a viable future as a restructured business, even though it remains to be seen how that restructuring will ultimately occur, and whether or not the restructured entity moves forward as a unit of PG&E Corporation or not.

Third, it is our view that the overall if many benefits of restructuring will be greater with cooperation between PG&E, NEG, and the creditors than without and we are not changing our efforts to find consensus with the creditors.

And fourth, we believe that the outcome of any bankruptcy proceeding by the PG&E NEG would not have a material adverse impact on the financial condition of Pacific Gas & Electric Company or of the corporation.

So those are the current status of the two -- the parts of our business.

And before -- just before we start taking questions, I want to assure you that our team is fully engaged on these matters.

We continue to focus on solid fundamental operations of the businesses themselves, and we continue to focus on resolving the uncertainty in each of those businesses for the benefit of the shareholders.

Thank you very much.

Before we begin our Q&A, let me just remind you that in this call, we have made a number of forward-looking statements based on expectations and assumptions that reflect information currently available to management.

Actual results may differ materially from those forward-looking statements.

We encourage you to review our SEC filings to obtain additional information and to better understand the many factors that can influence future results.

And now to keep things rolling for our question period, I would like to ask that everyone limit themselves one question during Q&A and if you have additional questions, you are, of course, welcome to get back in queue to ask the additional questions.

Deanne?

We're ready for the Q&A session.

Yes, sir.

Ladies and gentlemen, at this point in time, we will be taking your questions.

If you would like to ask a question, touch star followed a one on your phone.

If you would like to remove that question, touch star followed by a two.

And at this time we have a question from Mr. Paul Fremont of Jeffries.

Go ahead, please.

Thank you very much.

My question relates to the potential bankruptcy filing at NEG, number one, has -- have any of the holding company creditors provided any type of a change in their agreements that would provide a waiver in the event of an NEG filing.

And number two, can you give us an idea as to what potential tax benefits would accrue to the holding company in the event of a write-off of its NEG investments?

Yes.

This is Peter Darbee responding to that question.

With regard to a waiver from the parent company lenders, there has been no waiver that has been provided by the lenders to PG&E Corporation relative to the NEG situation.

The last changes to the corp lenders were many months ago, maybe close to a year ago.

So the answer to that question is no.

We have had ongoing discussions with them about what's going on at NEG, so they are generally apprised but we have not requested and they have not provided a waiver.

With respect to the tax benefits that the parent corporation may realize in a situation like this, we have not disclosed what that number might be in the past.

What we have said is that tax write-offs associated with the NEG could run into the hundreds of millions of dollars or more and that's the extent to which we have commented on that.

Thank you.

Okay.

At this time, we have a question from Scott Pearl of Credit Suisse First Boston.

Go ahead, please.

Good morning.

I know that you cannot comment with regard to the specifics of your settlement conference, but what I wanted to ask is more a conceptual question, and, you know, know if you basically view a positive outcome in the current California Supreme Court turn case related to Southern California Edison, as important or necessary component to any type of a resolution, be it your plan, commission plan or some sort of a settlement.

Yes, Scott, this is Chris Warner, Chief Regulatory Counsel for Pacific Gas and Electric Company.

I think as we said on previous calls, our plan of reorganization does not depend upon a successful outcome in the Edison case, which we believe has different facts and different legal issues than our own situation.

So I think that -- we continue to adhere to that view.

Does that hold true for all potential options?

As far as you see them?

I -- I think it probably would not be appropriate for us to comment on -- on various options.

Okay.

I guess just following up on that from -- from a conceptual standpoint, you know, I guess at this stage, this is really more of a question for Bob.

Do you see it absolutely necessary, from a -- from a shareholders' standpoint to separate, specifically generating assets out of the utility or is there, you know -- you know, is it a structural issue ultimately that I think you are driving towards, you know, nothing specifically but is there a structural issue with the company or is ultimately the goal here, you know, just maximizing value from a financial standpoint to shareholders?

Scott, we said we weren't going to comment on the settlement conference.

Nice try.

We're not going to comment.

Okay?

Thank you.

At this time, we have a question from Mr. Zack Schreiber of Duquesne Capital.

Go ahead.

Hi Bob, Peter, Gabe.

Hi, Zack.

On the -- on the potential filing of the National Energy Group, I think you had said -- and I just want to make sure I got it -- that filing could occur -- that you thought that the ultimate restructuring of the NEG would occur as part of a Chapter 11 filing and -- but that you weren't yet certain or clear whether that would be sort of a prepackaged, kind of conceptual filing or more of a involuntary filing but I thought you said irrespective, you thought the restructuring of the NEG would not have a material adverse impact on either the utility or the holding company.

I just wanted to hear you say that again.

Well, rather than repeat it, I would just say that your summary was accurate.

Got it.

And so, that statement, Bob, is basically you saying that -- that the restructuring that was put in place a couple of years ago holds?

Well, we've commented for -- in a number of situations on the various factors that lead us to reach that conclusion.

Yes, sir.

But the conclusion that we stated that we believe that it would not have a material adverse impact on either Pacific Gas & Electric Company or PG&E Corporation, includes that fact.

It also includes the fact that there have been in place affiliate rules that have been -- that have been imposed on us for years and we have followed for years.

Beautiful.

Thanks so much guys.

Good luck, guys.

Thank you.

At this time we have a question from Tom O'Neil from Lehman Brothers.

Go ahead, please.

Good morning.

A question around headroom and the unrecovered balance.

Where did you leave the quarter with regard to the unrecovered balance?

And then just curious if you might comment on some of the components assumed in the headroom for the year, things like gas price hydro conditions, and whether you were basically going to assume a return of the revenue requirements, the lowered revenue requirements from the DWR back to the customers in the form of a reduction.

This is Kent Harvey at the utility.

The end of the quarter we were at a pretax unrecovered cost of approximately $4 billion and in after-tax of $2.4 billion based on the balancing account balances.

That's the first part of your question.

In terms of our outlook for positive headroom, I would say that our estimate assumes that we have current rates and that the current DWR revenue requirement is basically in place as it is.

So to the extent there is any reduction in the DWR revenue requirement that would affect potentially our outlook, and I guess as Peter said, you know, headroom is calculated on a residual basis.

So it is not a fixed component in rates, and the actual headroom we book will depend on those but lots of other factors as well.

So we'll need to keep monitoring the various factors that affect the DWR revenues overall.

The size and the cost of our net open position, and changes to other rate components, for example.

So all of these factors make it really hard to forecast this item and so we may need to change our estimates as we go through the year.

Could you just comment on the gas price assumption and where hydro conditions sit after a pretty rainy April.

Yeah, you know, current gas prices, I think that -- that we're seeing, in California, are a little above the $5 range.

And you will want to remember that -- that our overall costs aren't as sensitive to gas prices as you might initially think and that in part is, you know, we have significant hydro resources and we have a better than average hydro year.

We have Diablo Canyon which obviously is not sensitive.

The majority of our QF are not sensitive to gas prices because those were all prices that were fixed out a couple of years back.

The DWR contracts do have some pieces that are sensitive to gas prices but not all of them.

So it's really less sensitive than you might initially think.

Okay.

Thank you.

At this time, we have a question from Jason West of Deutsche Bank.

Go ahead, please.

Hi.

Yes, just a couple of questions on the earnings outlook.

Well, it's sort of one big question, I will put it that way.

In terms of the '03 outlook, what is your assumptions on the GRC and sort of the Chapter 11 -- or the utility bankruptcy and the earnings outlook?

Okay, the -- the expectation with respect to the GRC is that that would probably come after the end of the year, and so it may come after the end of the year, but still be in time to be in the earnings for this year.

So the -- there is an assumption that we will get a GRC, but it may well be after this year.

But that may affect the reported results.

So that's where we stand there.

With respect to the -- the POR, we have not -- we're currently in this hiatus during the time that we are in settlement discussions so the expectation is that we will probably not come out of bankruptcy until at least the end of the year.

Okay.

And one follow-up on that, just in the quarter, I noticed that the utilities net income was up, you know, excluding the share count.

Sort of what was driving the income up versus last year at the utility.

This is Kent again.

It was 45 cents versus 44 cents so there was really no trend, year over year.

No, in the net income though.

Not the EPS but net income.

Oh, the net income.

Yes.

Well, we would continue to have a light increase in rate base during the year and, of course, one of the challenges is that we didn't receive any of the attrition revenues for '02 but of course this year we continue to operate without the '03 general rate case.

So I don't you see a big driver because of rate cases.

Okay.

At this time, we have a question from Vic Tietan of Deutsche Asset Management.

Go ahead, please.

Just a clarifying question, Bob or Peter, when you say no material adverse impact in the case of NEG resolution takes place, did you mean after tax benefits are taking into account or before tax benefits are taken into account?

And another question was about the headroom.

If the current rates --

Vic, hang on.

First of all, good morning and second of all, let's do your questions one at a time.

Okay.

Thank you.

So with respect to the first one, no material adverse impact simply means no material adverse impact.

We are where we are today.

We've reported our first quarter and we're saying that we do not expect a material adverse impact on that basis.

And I would add with or without taxes thrown into that consideration.

Okay.

Thank you.

And if I could ask another clarifying question about this recovery of the balance.

What's your current thinking as to how long will it take to recover that assuming the current rates remain in place?

Vic, this is Kent.

I don't know how to answer that one.

We talked about the difficulty of forecasting headroom for this year, and obviously in our balances, it's not a 2003 issue.

I we're -- we've really been pursuing our plan as a reorganization to resolve our current issue.

Okay.

I see.

Thank you.

Thanks, Vic.

At this time we have a question from Scott Pearl of Credit Suisse First Boston.

Go ahead, please.

Hi.

Just -- Kent I wanted to clarify something on the headroom.

You went through or I guess Peter went through the pieces, just trying to understand, you know, which of the -- the items impacted headroom were in sort of specific to things that happened this year related to Diablo or other adjustments and which of them are, you know, tend to be related more to ongoing impacts relative to -- to bond costs and the new DWR cost allocation.

Yeah, this is Kent again.

We did talk about the change in the methodology with respect to -- to DWR revenues, and a good piece of that is ongoing, but there was also a significant piece that's more one time in the quarter.

And then in addition to that, we have some other ongoing items like the new charges for the DWR bonds, the fact that the revenue requirement went up in '03, as compared to the prior year, and then we had another one-time item, which was the Diablo Canyon outage that we referred to.

Then we had other items that were lower in the first quarter because of moderate temperatures and therefore lower sales.

So it's a mix-and-match between some one-time and some ongoing.

I guess as far as, you know, what you saw in the quarter year over year, can you just give very, rough, like, proportional, as far as how much of that was related to Diablo and the lower weather, and I guess the one-time change as far as how you account for DWR.

Yeah, I can give you ballpark numbers in terms of after tax.

The change in the methodology for the DWR, the total after tax is about $100 million, and I would say more than half of that is one-time.

Perhaps $60 million is one time.

The DWR bonds are roughly in maybe the $50 million range for the quarter, the fact that we now have a bond surcharge.

The Diablo Canyon outage, I'd say roughly, is in the $75-80 million after tax.

And then the remainder would be revenues and so forth and any other small items.

Weather you mean?

Right.

That would be reflected in the revenues.

Okay.

Again, just one quick follow-up as we put things in perspective, the shares, you didn't use the fully diluted share count for the quarter, right, because it would be anti-dilutive with the reported loss; is that right.

That's correct.

It would have reduced the amount of loss that we would have reported and according to GAAP, we should use the $382 million.

On a fully diluted basis, the share count would be about $401 million.

Okay.

And you're still on track for -- I think you talked before, about 411 for the year.

Is that still what you are using for the guidance?

On the order of 411, yeah.

Okay.

Thanks.

At this time, we have a question from Zack Schreiber of Duquesne Capital.

Go ahead, please.

Just a follow-up question on headroom here.

Kent, I was wondering if you could refresh our memory what was the headroom you actually booked in 2002.

How much of that headroom came from that one-time ISO.

At first I thought it was $350 million.

What was the ongoing operating headroom for '02 and what kind of headroom were you expecting in '03 and if the headroom for '03 is in spite of all of these adjustments which we just went through is going to be coming in, in line with your revised guidance for '03 headroom.

Okay, Zack, the after-tax reported headroom in '02 was approximately $1 billion.

It's a little more than a billion.

Mm-hmm.

And that did not include the ISO-related costs that were taken off of our books.

That's more of the clean numbers absent that ISO.

In an attachment to our press release, we do provide our guidance and our guidance on headroom that's comparable in terms of the after-tax number is between the range of $200 million to $400 million for calendar year '03.

And would you say that's approximately $500 million of that reduction year-over-year is from the higher DWR revenue requirement with the bond surcharges in there on an annualized basis and just a change in the DWR requirement year-over-year.

If you're just looking at the revenue requirement that was adopted by the PUC, that did go up by a couple hundred million, and the bond surcharge was $300 million.

What we end up sending to DWR is not just the revenue requirement, we send an adopted rate times the kilowatt hours used.

But your ballpark for those pieces are right, absent all the other things going on in the marketplace.

So, in addition, we have the Diablo Canyon outage and so that affects our headroom.

We also have our GRC, which will use up some of the overall rates by increasing base rates and so you want to consider those items as well.

Great.

And the final question is $1.90 to $2 guidance has some assumption in it for a GRC outcome.

Are we sort of going to see a situation, which I think we probably saw -- I mean, three or four years ago where we'll have a major sort of benefit in the fourth quarter, which will be effective, maybe some sort of retroactive treatment for applying in that quarter what the rate would have been in the full year.

Is that what you are referring in the $1.90 to $2, Peter.

Yes.

The answer to the question is assuming we get the GRC results in prior to publishing our 10-K, and our yearly results, then we will be able to include the effects of that entirely in the fourth quarter of '03.

And -- okay.

And -- and that assumes the GRC would be effective when in through what portion of '03?

It's supposed to be effective for the entire year, and what we're talking about is the timing of the actual decision, when the decision comes out it will be retroactive to January 1st and the rate case plan shows it in early February for the final decision.

Okay.

And what's the next event in that proceeding and what kind of expectations are built into the $1.90 and $2 and what are we left with it things don't work out in terms of, you know, 2003 guidance?

This is Kent.

I just want to say in terms of what is built in, essentially our target assumes that we are able to earn our authorized return.

Which is 11.2?

That's correct.

And Chris Warner was going to give a brief update on the status of the proceeding.

This is Chris Warner.

The hearings in the proceeding will begin at the end of this month and will continue over a couple of months in the summer.

Thanks so much, guys.

Good luck.

Thanks.

At this time we have a question from Daniele Seitz of Smith Barney.

Hello.

Most of my questions have been answered but I'm wondering if the DIablo Canyon outage, this was the regular scheduled outage with no extra things or are there any additional inspections that you are doing, or any new problems.

Daniele, this is Gordon Smith, Pacific Gas and Electric.

The outage we experienced in the first quarter was a refueling outage.

And nothing special about it?

Well, it -- it was longer than expected due to inspection and remedying some crack to steam generator tubes.

Okay.

And this should not affect the rest of the year?

Unless the Nuclear Regulatory Commission orders a mid-service shutdown but we're currently in discussions with it regarding the steam generator, but we think we've answered all their questions efficiently.

Are there plans to replace it or do you -- are there any further plans that you are going to be sharing with us eventually?

Well, eventually there will be a steam generator replacement but we're talking many years into the future.

Okay.

So you don't anticipate that it will be done in the near future?

Yeah, that's correct.

Okay.

Okay.

Great.

And originally -- on another subject -- originally when you were thinking about the potential sale of the New England assets from NEG, have there been any -- now are you on a totally different type of potential resolution or is this still on?

Is this part of the plan?

Is that possible now?

This is Tom King with the NEG.

We are still assessing the potential sale of those particular assets and have not made any definitive decisions around it at this time.

Mm-hmm.

Okay.

And there was also a -- eventually that you could remain owner of some of the assets of NEG that too is also part of a potential solution?

That's correct.

We're -- we're making the assessments as we go through the entire complexity of the process and we'll make those decisions accordingly.

Great.

And just last question.

You -- the potential conference meeting has been postponed to -- to two months later, do you -- is this a final, final, and -- or could it be postponed again?

I mean, I didn't quite sense if it was this is a final day.

All that has happened is that the initial 60-day stay period for the bankruptcy trial proceedings has been extended by an additional 30 days.

There's been no statement made about anything beyond the end of that aggregate 90-day period.

Okay.

Is it --

The next settlement conference is settled for June 16th.

Okay.

Okay.

I just wanted to know if there was the word "final" to it so that there was no other additional postponement expected but it -- it is not the case?

All I can say about it is that the current length of the aggregate period is 90 days and that the status conference is scheduled for the 16th of June.

Mm-hmm.

Thank you.

That date is just a few days after the 90-day period ends.

Oh, I understand.

Okay.

Thank you very much.

At this time we have a question from Charles Moore of CJM Capital.

Go ahead, please.

Yes, my question is revolving around the conversion of the GE and Lehman Brothers 2 to 3% options in NEG and I know they have the right to force you to buy them back at fair market value after 45 days after the maturity and I believe that time has passed.

My question is, what would the cash requirement be in order to buy those back from them?

There were a couple of questions embedded in what you asked.

The first is that the -- that group exercised their option to convert the share -- the options into shares and so they are now shareholders.

Associated with that process is an -- an appraisal, basically of -- a resolution process for determining the value of those shares, and what happened was we began that process with GE, and as the process went on, they made the request to stop the process.

Because I -- I believe that they would not have liked the price that they would have gotten and -- and so they concluded that we -- we would just stop and not push forward.

Other creditors have sort of keyed off of what GE has done and have not moved forward with requesting a valuation and the whole thing is sort of on hold is the way I would describe it at this point in time.

Obviously with the NEG, where one might argue there are a -- there's excess of liabilities over assets, there's serious question about what the value of that stock would be worth and I think that that's the reason that GE and others have decided they would not press the valuation point at this time.

Consequently, we don't anticipate a significant cash requirement on the part of the parent.

Okay.

Okay.

Thank you.

At this time, we he have a question from Tom O'Neil of Lehman Brothers.

Go ahead, please.

Just a follow-up question on headroom.

Just curious into 2004, I guess what you are saying is the midpoint of this year is $300 million and then if we can add back a few of these one-time items the 80 million and the $60 million, just wondering if you could outline any sort of material pluses or minuses we should consider for 2004 versus 2003, outside of the obvious of gas prices, hydro, weather, those sorts of things.

Yeah, Tom, this is Kent again.

I can't think of any offhand.

One that we talked about earlier on the call was what happened with DWR revenues and I think that one is out there and that's not completely clear, obviously.

But I can't think of any other big items, other than sort of the general list we've provided are the key things that can move in various directions.

Great.

Thank you.

At this time we have a question from Mr. Paul Fremont of Jeffries.

Go ahead, please.

Just a quick numbers update.

In terms of estimated rate base at the end of this year, and also in you could give us an idea what the current level of holding company debt is and the level of cash at the end of the first quarter.

Right.

This is Kent, in terms of rate base numbers, do you actually have them, Peter.

I don't have them.

I have the cash numbers.

I don't -- I only have just my real ballpark feeling for the relative magnitude of the rate base to the different pieces of business but it would be extremely rough and so we probably need to follow up with you on that one.

Holding company debt in cash?

Yeah, let me just stress the cash first and we're looking for the debt number at this point, but the -- the cash at the holding company is $539 million as of the end of the quarter.

Cash, by the way, at the NEG is 759 million, and cash at the utility is $3.8 billion, and the debt at the holding company is $976 million as of the end of the quarter.

Actually that was at the end of December 31st, and it has remained approximately the same.

Okay.

That $976 million of debt at the holding company and then the cash just at the holding company is $539?

That's correct.

All right, Paul?

Thank you.

There are no questions at this time.

All right.

I would like to thank everybody for joining us this morning, and have a good day.