The cost of producing an ebook isn't significantly less than the cost of producing the print version.
It depends on the workflow and the book. If the publisher is doing ebooks only, you're correct, particularly if said publisher wants to do the job right. They're already doing the developmental editing, the PR, and so on. Properly formatting an ebook from scratch is similar to typesetting. It's generally HTML markup. (Why yes, I
am formatting some reverted works.)
If the publisher is doing print and ebook in their workflow, then the cost of conversion isn't going to be anywhere near the cost of producing a book from scratch because they don't have to bother with editing and some of the other costs.
Let's face it: There are a truckload of free converters that will take a Word file and spit it back out in an ebook format. A quickie conversion is fast, but the end file will probably be riddled with formatting errors.
I wonder how PA is doing their conversion?