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PG&E banking on big profits after utility leaves bankruptcy

February 19, 2020

By Michael Liedtke : sfgate – excerpt

SAN FRANCISCO (AP) — Pacific Gas and Electric says it expects to become more profitable than ever after it emerges from bankruptcy and pays off more than $25 billion in losses sustained in catastrophic wildfires ignited by its outdated equipment.

The nation’s largest utility shared its rosy outlook on Tuesday, along with its sobering results for 2019.

PG&E wound up losing nearly $7.7 billion last year, widening from its previous record loss of $6.8 billion in 2018. Last year’s loss included a $3.6 billion setback during the October-December period that included an $86 million charge for refunds to customers who had their power shut off to minimize the chances of sparking more wildfires last fall…

As part of its recovery, PG&E is counting on a big helping hand from the roughly 16 million Northern Californians in the utility’s sprawling service territory. The forecast envisions rates rising by 8% each year through 2024, far faster than the expected rate of inflation.

And as it makes more money, PG&E is also promising to spend $37 billion to $41 billion on equipment upgrades and other improvements during the five-year period.

To pay for that, in addition to the money owed to wildfire victims, PG&E plans to issue nearly $16 billion in additional stock and take on $38 billion in debt as part of its bankruptcy plan. The debt will cause PG&E’s annual interest payments to rise by 50% between this year through 2024 when it will be doling out about $2 billion to its lenders, according to the company’s projections.

Investors’ growing optimism about PG&E’s ability to bounce back from bankruptcy has already lifted the company’s stock by about 50% so far this year. The shares slipped 11 cents to $16.09 Tuesday. The stock peaked at $71.57 in September 2017 before PG&E’s wildfire losses sent the company into a downward spiral… (more)

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