PG&E Corp. says it may spin off, sell or otherwise separate its natural gas business if California does not overhaul its wildfire liability rules — a warning that puts the future of the utility’s gas operations squarely on the state’s next legislative move.
Patti Poppe, PG&E chief executive (Credits: Insurance Journal)
The utility’s 4 million gas customers are bearing borrowing costs linked to the company’s sub-investment-grade credit because the gas business sits within a holding company exposed to wildfire risk, chief executive Patti Poppe said Thursday on a call with investors. “That seems like an issue that should be resolved one way or another,” she said.
PG&E Gas Business Separation: What’s on the Table
PG&E pushed for legislation that would limit utilities’ liabilities for wildfires sparked by their equipment. While Governor Gavin Newsom backed changes, California lawmakers failed to reach an agreement on the contentious issue before ending their legislative session.
As a result, the company is weighing options ranging from corporate ring-fencing to sales and separations as part of a strategic review announced in September, Poppe said. As part of that review, PG&E is planning to defer $2 billion of investments next year.
Why California Wildfire Liability Rules Matter for PG&E
The standoff reflects a long-running tension in California: utilities face potentially enormous liabilities when their equipment sparks wildfires, while regulators and lawmakers wrestle with how to protect both customers and the financial stability of the companies that keep the lights — and gas — on. PG&E’s warning signals that, without a legislative fix, the company would rather restructure the business than keep carrying the same risk profile.
For now, no separation is decided. But with a strategic review under way and $2 billion in investment deferred, the gas business’s future is firmly on the table.
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Source: Insurance Journal — read the full story there.
