PG&E Corp. executives have sketched out a plan to house the company’s non-nuclear generation assets in a new subsidiary, stakes in which could be sold to fund future safety and reliability investments.
Representatives of the company’s Pacific Gas and Electric Company utility on Sept. 28 filed an application with the California Public Utilities Commission to separate its non-nuclear plants into the newly formed Pacific Generation LLC. That subsidiary would be a CPUC-regulated utility with a 2023 rate base of about $3.5 billion, about 7% of the company’s total, and remain dedicated to PG&E’s customer base of more than 16 million people in Northern and Central California.
If approved, PG&E’s plan would let the company sell up to 49.9% of Pacific Generation – which is set to have 5.6 GW of generation capacity – to one or more investors. That, executives noted in an investor presentation, will enable them to fund investments in their network and equipment without having to issue new stock and dilute current investors. If the regulatory and investor processes move forward as expected, PG&E CEO Patti Poppe and her team are aiming for a year-end 2023 close of the 49.9% sale.
The billions of dollars that would be raised from the sale of the Pacific Generation stake would help PG&E fund planned investments in wildfire protections, including a rapid scaling of its undergrounding program, with more certainty. The company this spring said it plans to spend $53 billion by the end of 2026 on generation, transmission, storage and hardening projects. During that period, both PG&E’s rate base and its core earnings per share are expected to grow at almost double digits annually.
Shares of PG&E (Ticker: PCG) rose after hours Sept. 28 on word of its plans but gave up those gains and more the next morning as the broader market opened down about 2%. That gain came on top of a 2.5% climb in regular trading. Over the past six months, the stock is up about 4% and its market capitalization is now nearly $31 billion.
