Among the short- and long-term items PG&E Corp is keeping on its plate are a soon-to-be-announced settlement of its 2007 general rate case, the possibility of pursuing development of a nuclear power plant outside of California and several nonutility electric and natural gas projects, PG&E CEO Peter Darbee said during a conference call with financial analysts Wednesday. Darbee also said he is not ruling out possible acquisitions in the future.
PG&E is in settlement negotiations on its $682 million general rate increase request with the independent Division of Ratepayer Advocates (DRA) at the California Public Utilities Commission (CPUC) and expects a potential settlement conference Aug. 16 with a separate motion to approve the deal filed before the end of this month, according to PG&E’s senior executives. They said the utility still expects a CPUC decision by year-end.
In response to a question concerning the company’s previously announced interest in a new nuclear plant, Darbee pointed out that current law in California prevents nuclear power development until the state builds sufficient waste storage facilities for its existing plants, Canyon (PG&E) and San Onofre (Southern California Edison Co., et al.). However, nationally, he said the company thinks nuclear power must be one of the options for meeting the nation’s future power needs and addressing various environmental and logistical challenges.
“We believe among the solutions required to meet future energy needs, nuclear should be a part of that,” Darbee said. “We are evaluating other opportunities outside of California, as well as other things, such as increased supplies of liquefied natural gas (LNG). We have not ruled nuclear out, but we are in the very formative stages. We see nuclear as a source of fuel that does not create dependence on other countries and the supplies of natural gas and oil from them, and also one that is consistent in the efforts to reduce carbon in the environment (CO2).”
In response to a question about looking at merger/acquisition possibilities, Darbee said the company will continue to consider opportunities in the marketplace, adding that part of the ongoing consideration involves tracking what he called “the difficulties and challenges other companies are having in trying to complete their deals.”
PG&E’s senior officials confirmed that the company is still pursuing a new interstate natural gas pipeline to the California-Oregon border from a proposed LNG receiving terminal along the Oregon coast at Coos Bay, OR, along with major western electric transmission line projects in south-central California and along the Pacific Coast from Vancouver, BC, in western Canada to a point just north of San Francisco. “There hasn’t been a whole lot of new activity on the project recently, however, said Christopher Johns, PG&E CFO.
Johns said that the general rate case CPUC hearings were completed early in July, and the confidential settlement talks with DRA are ongoing. He cautioned that there is no certainty that a settlement agreement will be reached, or will be approved by the CPUC, but under questioning he indicated they have the target dates later this month.
Within the rate case are $290 million in projected costs for the utility’s so-called “transformation” of its operations, including the initial smart metering work. Of those costs, a little more than half (55%) are slated to be offset by immediate benefits, said Johns, noting the benefits are the result of initiatives that have already been implemented or will be by the end of this year.
While the company has pledged to have a job — not necessarily the same job — for all existing employees, Johns said that the company has budgeted substantial funds this year for severance and re-training.
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