PG&E Corp. and Pacific Gas and Electric Co. executives during the second quarter earnings call, the first in 18 months, illustrated the heavy lifting ahead to reduce debt, withstand another wildfire season and complete a reorganization in the aftermath of Chapter 11 bankruptcy.
Interim CEO Bill Smith during the quarterly call touched on wildfire mitigation plans and efforts to find a permanent chief by the end of this year to lead the transformation, noting that utility President/CEO Andrew Vesey also is stepping down.
“With our emergence from Chapter 11, this is a natural inflection point for leaders to evaluate their future, and we’ll continue to build our team through internal and external hires,” Smith said. Risk reduction, safety and reliability are essential to transforming the combination utility and holding company, he added.
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After a slow start in some areas from Covid 19 impacts, PG&E ison track to meet all of its wildfire mitigation plan targets, Smith said. “We’re evaluating a range of technologies, much as we did with methane leakage technology adopted years ago by our gas business. We’re working with California-based companies on emerging technologies that will reduce wildfire risk.”
Under the program to shut off power when dry, windy weather conditions prevail, PG&E has a modified approach to make the public safety power shutoffs (PSPS) “smaller, shorter and smarter,” Smith said. “We’re working hard to lessen the impact on customers from PSPS.”
PG&E is in the process of pre-positioning about 460 MW of temporary generation to meet critical community needs in areas that have a high probability of an outage. They are being “strategically placed” at more than 60 substations and other locations, allowing power to be kept on in parts of PSPS areas, he said.
CFO Jason Wells said the latest estimated range for bankruptcy and legal costs is $2.63-2.67 billion. Because PG&E equipment has been identified as the cause of last year’s Kincade Fire, the utility has taken a one-time charge. He also noted a $620 million charge related to a trust for wildfire victims.
Executives during the call said going forward, the utility and holding company have an ongoing cost optimization program including selling under-used assets, real estate and excess renewable energy credits. There also is a reassessment related to the $10 billion spent every year for suppliers.
In terms of debt reduction, Wells outlined $4.8 billion in debt at the parent company. The company has committed to not reinstating a dividend for now. The corporation plans to pay off about $3 billion of debt over the next five years. The utility has $6 billion in temporary debt that it expects to pay down with $7.5 billion from a securitization loan application pending at the California Public Utilities Commission.
Net losses totaled $1.9 billion (minus $3.73/share), compared with year-ago losses of $2.5 billion (minus $4.83).
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