Post-bankruptcy, PG&E seeks to reinvent itself, to get out of debt


The executives of PG&E Corp. and Pacific Gas and Electric Co. in the second quarter earnings call, the first in 18 months, illustrated the considerable efforts ahead to reduce debt, withstand another wildfire season and complete a reorganization following Chapter 11 bankruptcy.

Acting CEO Bill Smith on the quarterly call spoke of wildfire mitigation plans and efforts to find a permanent leader by the end of this year to lead the transformation, noting that the Electricity company president / CEO Andrew Vesey is also stepping down.

“With our release of Chapter 11, this is a natural inflection point for leaders to assess their future, and we will continue to strengthen our team through internal and external hires,” said Smith. Risk reduction, safety and reliability are key to transforming the combination of utilities and holding companies, he added.

More quarterly earnings coverage by NGI can be found here.

After a slow start in some areas due to the impacts of Covid 19, PG&E is on track to meet all of its wildfire mitigation plan goals, Smith said. “We are evaluating a range of technologies, just as we did with the methane leak technology adopted years ago by our gas company. We are working with California-based companies on emerging technologies that will reduce the risk of wildfires.

As part of the Dry, Windy Weather Outage Program, PG&E has a modified approach to making Public Safety Power Outages (PSPS) “smaller, shorter and smarter,” Smith said. “We are working hard to reduce the impact of PSPS on customers. “

PG&E is in the process of pre-positioning approximately 460 MW of temporary generation to meet critical community needs in areas with a high probability of outage. They are “strategically placed” in more than 60 substations and other locations, helping to maintain power in parts of the PSPS areas, he said.

CFO Jason Wells said the latest estimated range for bankruptcies and legal fees is $ 2.63 billion to $ 2.67 billion. Because PG&E equipment was identified as the cause of last year Kincade fire, the utility levied one-off charges. He also noted a charge of $ 620 million related to a trust for victims of the wildfires.

Executives on the call said that in the future, the utility and the holding company have an ongoing cost optimization program, including the sale of underutilized assets, real estate and surplus renewable energy credits. There is also a reassessment related to the $ 10 billion spent annually on suppliers.

In terms of debt reduction, Wells pointed to the parent company’s $ 4.8 billion debt. The company has made a commitment not to reinstate a dividend at this time. The company plans to repay about $ 3 billion in debt over the next five years. The utility has $ 6 billion in temporary debt that it expects to repay with $ 7.5 billion from a pending securitization loan application with the California Public Utilities Commission.

Net losses totaled $ 1.9 billion (minus $ 3.73 / share), compared to losses of $ 2.5 billion a year ago (minus $ 4.83).


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