During a conference call last week, PG&E CEO Peter Darbee said the company foresees a day when it may once again be one of the energy industry's leading companies. However, he could not put a timetable on when it might consider acquiring other operations.
"We are focused first and foremost on the transformation of the [utility] business and delivering better, faster and more cost-effective service to our customers, so that is very important," Darbee said. "What we have also said is that longer term, we want to be a leader in the industry, and that would suggest we will be a 'consolidator' rather than somebody that is acquired.
"Beyond that, we are just monitoring what is happening in the industry, so that at such a time when we're ready with the transformation, we will have established sufficient momentum [and] will have done our homework, and we will be prepared."
In another sign PG&E has fully cleared its post-Chapter 11 bankruptcy, utility officials lowered the amount of the energy recovery bonds that will be sold later this year by more than $300 million, meaning they will total about $800 million rather than the previously estimated $1.1 billion. A series of settlements of suppliers' outstanding claims against the utility has permitted the reduction.
Christopher Johns, CFO for the utility's holding company, PG&E Corp., made this and a number of other observations about the utility during a second quarter earnings conference call with financial analysts. He did not speculate on whether the securitization bonds could be reduced further through other pending suppler settlements.
In response to other questions from analysts, CFO Kent Harvey indicated that PG&E's utility is shielded from the worst effects of the volatile wholesale natural gas market for both its electric and gas retail utility operations. On the electric side, its ownership of substantial hydroelectric and nuclear generation provides one buffer, and on the gas side it has regulatory protections in which it can adjust retail gas rates monthly to reflect changes in the wholesale price.
For the portions of its power supplies coming from the state Department of Water Resources' (DWR) wholesale electricity contracts, "the higher prices and the volatility of the gas market haven't had the same type of impact," Harvey said. "Each year we can true up our DWR and purchased power costs, and if we start going under, we can go in for an immediate rate change. When you look at our electric procurement to date, we are somewhat overcollected, and we have made a proposal to the California Public Utilities Commission not to adjust rates yet because it will work its way down naturally over the coming months."
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