PG&E; says cost-cutting efforts won’t meet expectations in ’09

PG&E; Corp., owner of Pacific Gas & Electric Co., said Friday that 2009 earnings would lag behind analyst estimates as capital spending increases and cost-cutting efforts miss forecasts.

Per-share earnings, which may exclude such items as legal settlements, will be $3.15 to $3.25, the San Francisco company said in a regulatory filing. PG&E; had been expected to earn $3.35 a share, based on the average of nine analyst estimates compiled by Bloomberg.

Pacific Gas & Electric is poised to spend more than forecast on its distribution and transmission system. PG&E; also said efforts to streamline operations, called transformation by the company, were yielding fewer benefits.

“They’re projecting less to come from the cost savings,” said Paul Patterson, an analyst with Glenrock Associates in New York, who doesn’t own the shares or have a rating on them. “It’s not like they failed the test; they’re just not getting the A-plus people had expected.”

The utility’s 12,000 field workers have proved resistant to changes in the workplace designed to improve efficiency, PG&E; said. The company said savings from streamlining operations for 2008 through 2011 will be $185 million to $285 million less than a forecast made in April.

For 2009, the company’s forecast for savings is about $100 million to $160 million, compared with the earlier forecast of $146 million to $223 million.

“Transformation is providing significant benefits but less than initially projected,” Chief Executive Peter Darbee said Friday in a call with analysts and investors. Investors shouldn’t expect PG&E; to exceed its average annual earnings growth targets of 8%, Darbee said.

PG&E; shares fell 99 cents, or 2.2%, to $44.74.