Pacific Gas & Electric’s parent corporation reported considerably higher earnings for the first quarter of this year of $475 million, or 22 cents per share. That compares to net income of $120 million, or 6 cents per share for the first quarter of 2021.
The utility earnings were even higher, at $527 million in this year’s first quarter compared to $174 million in 2021.
Patti Poppe, PG&E CEO, told financial analysts during an April 28 call that the company culture is “changing” and that it has the “right tools in place” to mitigate wildfire and financial risks. She pointed to extensive inspections of utility equipment, increased cutting of trees, and the undergrounding of power lines in high-fire-threat regions of its territory.
Power line safety settings were installed on 169 circuits extending more than 11,000 miles, allowing power to be cut in less than a tenth of a second in the face of fire danger, Poppi said. As a result, reportable fires were slashed by 80% last year, she claimed.
PG&E also recently submitted its 2023 cost of capital case to the California Public Utilities Commission seeking a $226.2 million increase above current rates. It also asks the CPUC to raise its rate of equity to 11% from the current 10.25%
Other good news for PG&E is its recent $55 million in agreements to settle the 2019 Kincaid Fire and last year’s massive Dixie Fire, which drop the criminal charges against the company
“Picking up speed
Poppe was optimistic that the company could reduce the costs of undergrounding from today’s $3.5 million a mile to $2.5 million in 2026. “We buried 41 miles this year and are picking up speed.” The company aims to bury 3,500 miles of lines by 2026 and another 6,500 miles over the next five years.
She said that the time to design and attain local permits for undergrounding projects has dropped dramatically. The first project took 13 months and it now takes five months.
She also pointed to two bills at the state Legislature seeking to speed up the undergrounding of overhead lines, SB 844 and AB 2889.
However, one financial analyst pointed out that the utility under SB 844 would be prohibited from recouping undergrounding costs from ratepayers for five years, and only on condition that the buried line does not suffer an outage and the work did not cause a fire. Poppi replied that it is still early in the legislative session, meaning amendments can be sought.
“The good news is that people love undergrounding,” she said.
She was asked if the company would consider seeking federal or state funds to cover come of its undergrounding costs, on which it earns a double-digit profit. “External funding sources are not required,” she said, adding she “wouldn’t object to external funding” for vegetation management or other areas.
Another potential financial boost is a pending bill that would allow utilities to recover their operating and maintenance expenses with ratepayer-backed bonds paid over several years, in place of being recouped in one year.
In addition, the company’s approved $7.5 billion in ratepayer-backed bonds to cover $6 billion of its temporary debt arising from bankruptcy court will soon be issued in three tranches. Those costs are off its books.
Summer supplies are solid
Poppe told analysts on Thursday that neither supply chain constraints nor the federal investigation of a complaint by a California company that Chinese solar panel parts were being imported in violation of anti-dumping rules is undermining its projects. “We are very comfortable about the supply situation for this summer even if more storage doesn’t come online,” she said, pointing out that the utility just installed 183 MW of storage near its Moss Landing substation.
She also highlighted the huge potential of using electric vehicles to charge the grid, homes, and local regions. PG&E electric service vehicles represent 6,600 MW but Poppe said that “not a single kilowatt is being powered back to the grid.” These vehicles alone, the equivalent of three big power plants, represent “a huge opportunity” to support the system, she said.
