Positioning his company behind California's clean energy push, Pacific Gas and Electric Co. (PG&E) CEO Anthony Earley said Wednesday that the combination utility will continue to focus its future growth on projects that support implementation of the statewide initiative.
While reporting reduced quarterly earnings due mostly to delays in regulatory processing of various rate matters, Earley reiterated on a conference call with financial analysts that PG&E plans to grow through the added infrastructure and programs spurred by a new state law on clean energy (SB 350), which sets goals for increased renewable energy and efficiency programs.
In response to an analyst's question, Earley downplayed any interest in mergers and acquisitions (M&A), while conceding that there has been increased M&A activity in the utility sector, particularly involving natural gas utility purchases.
"Generally, we don't comment on M&A, but one interesting observation is that everyone seems to be buying gas utilities, and we already have 4.5 million gas customers, so I think we are in pretty good shape," Earley said.
While the growth from the new state law is long term, ultimately it will translate into growth for PG&E and the other state's utilities, both Earley and CFO Kent Harvey told analysts. The more immediate clean energy goals set for 2020 are pretty much accounted for in the combination utility's capital expenditure plans and pending regulatory cases.
"The new SB 350 requirements [see Daily GPI, Oct. 8] start showing up in the 2020s, so the only conclusion you can draw is that given California's commitment to a clean energy environment, it will require utilities to have continued investment to upgrade their systems," Earley said.
In response to another question about PG&E's interest in pursuing "unregulated-type investments," Earley said "we continue to look at those opportunities, but as I have said in the past, the California utility rules make it very difficult to start from scratch [buying nonutility assets] because it's hard to take your utility expertise away from the regulated side. It is also hard to justify because we have so many growth opportunities within the utility right now."
For 3Q2015, PG&E reported net income of $307 million (63 cents/share), compared to $811 million ($1.71) for the same period in 2014.
Quarterly results were lower, PG&E said, because the gas transmission and storage rate case has yet to be resolved this year and will not receive a final decision until next year.