After more than six years of its natural gas operations being caught in a perfect storm of legal, regulatory, political and economic controversy, San Francisco-based Pacific Gas and Electric (PG&E) is beginning to emphasize climate change and the multi-billion-dollar electric side of its combination utility business.
CEO Geisha Williams underscored the transition away from gas matters in a quarterly earnings conference call Tuesday. She said the large combination utility is close to closing the books on outstanding legal cases related to the fatal 2010 San Bruno gas transmission pipeline rupture and explosion in a suburban neighborhood south of San Francisco.
Williams reported that a settlement to resolve all outstanding legal claims from the San Bruno pipeline failure was reached in March and has been approved on a preliminary basis by the judge in the case, who has scheduled a hearing for final approval on July 18. Separately, in late March PG&E and the parties to anex parte investigation at the California Public Utilities Commission reached a settlement in the case through a combination of financial and nonfinancial remedies.
“If approved, these two settlements move us substantially closer to resolving the outstanding San Bruno legal matters," Williams said.
Williams spent much of the conference call talking about PG&E’s commitment to California’s clean energy plan. The utility has proposed closing its nuclear generation plant and de-emphasizing gas-fired generation in favor of renewables.
"We are absolutely committed to remaining a key partner in the state's efforts" to create a clean energy economy and drastically reduce the state's carbon footprint, Williams said.
In response to questions about the prospects for gas system growth, Jason Wells, PG&E CFO, said there are few prospects and the outlook is flat on the gas side of the business, particularly given the state's aggressive carbon-reducing agenda, which discourages fossil fuel use.
In regard to future capital spending, almost all of the hundreds of millions of dollar are targeted at replacement and safety work -- not expanding the transmission/distribution infrastructure, Wells said.
"The driver around the natural gas transmission growth is less around new capacity and more about replacement and safety upgrades to the system," Wells said.
He was asked by another analyst if he saw that changing at all in the future, five or 10 years from now. Wells said “no,” emphasizing that the pattern for gas-related capital spending will be driven entirely by safety, not capacity.
For 1Q2017, PG&E reported net income of $576 million ($1.13/share), compared to $107 million (22 cents) for the same period last year.