PG&E Hopes to Sell Generation Assets by End of 2023 to Raise Cash

Pacific Gas & Electric expects to begin looking for a buyer of 5.6 GW of utility-owned generating capacity—mostly hydropower dams—in the first quarter of 2022. PG&E will retain full interest in its Diablo Canyon nuclear plant, but partially unload its other generation assets.

If all goes as planned, the utility expects to sell a minority interest in the facilities by the end of 2023, Chris Foster, chief financial officer for Pacific Gas & Electric Corp., told financial analysts Oct. 27 during the PG&E’s third quarter 2022 earnings report. There’s already interest in buying the facilities, Foster said, though he would not identify the interested parties.

PG&E laid out these and other details of its work to reduce wildfire risk and maintain financial stability as it reported improved third quarter earnings compared to the same period last year.

In the third quarter of 2021, the corporation lost more than $1 billion, a loss of 55 cents a share. In contrast, third quarter operations this year netted PG&E $456 million, or 21 cents a share.

Patti Poppe, PG&E Corp. chief executive officer, said the latest results indicate the corporation is on track to meet its expected $1.09 to $1.11 earnings per share target for all of 2022. She said over the next couple years, earnings should continue to improve by about 10% or more a year.

The corporation noted, however, that meeting that goal will depend upon not issuing additional shares, but instead raising money by selling power plants.

The utility needs to raise funds in order to cover an estimated $5.7 billion of wildfire-related costs as well as to self-insure against future wildfire liabilities. It also needs to pay down debt incurred to upgrade its power transmission and distribution facilities to prevent them from sparking future wildfires.

PG&E issued $7.5 billion in bonds this year to meet expenses stemming from what it called “catastrophic wildfires,” including the fire its facilities sparked east of Chico that burned down the town of Paradise in the Sierra foothills.

Assuming PG&E clears regulatory hurdles, Foster said the planned sale to raise needed money should be completed by the end of 2023. One key approval involves its request to the CPUC late last month to give it the green light to transfer generation assets to a new subsidiary known as Pacific Generation LLC. Foster said he expects the CPUC to act on that request in the third quarter of 2023, which should clear the way for subsequent sale of the facilities.

Poppe told analysts that meanwhile the utility has “mitigated 90% of wildfire risk” posed by its extensive network of power lines. This, she said, will allow the utility to exit from the enhanced safety and regulatory scrutiny it’s been under as a result of past wildfires sparked by its lines.

Ultimately, Poppe said, PG&E is aiming to reduce its wildfire risk by 99%. Toward that end, PG&E executives noted the utility plans to file a 10-year plan next year with the CPUC to place many of its power lines underground.

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PG&E Hopes to Sell Generation Assets by End of 2023 to Raise Cash

William J. Kelly

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