PG&E Monday Update. Late last week, PG&E was cleared from last year’s Tubb Fire by Cal Fire’s investigation. This should clear much of the potential financial liability and is the reason behind the bump in the stock price. Note that much of the buying of the stock is by short term investors looking for the volatility, not the usual institutional investors seeking stable returns typical in utilities. Almost two weeks ago, PG&E notified the State that it would file for chapter 11 on the 29th of January. Whether this still happens is up in the air. Here’s a sidenote, this is a symptom of the monopoly utility model problem. IOUs were given monopolies by the States to access low cost private capital. If the IOU relies on their credit rating to provide a service to consumers, an IOU with junk credit isn’t deserving of the monopoly. For another option to utility business model, listen to my conversation with the CEO of Connexus Energy, a cooperative utility where the shareholder is the customer.
The Joint Jurisdiction. Prior to the chapter 11 filing, NextEra asked FERC to get involved in case that PG&E were to try and cancel contracts with power producers, solar included. FERC responded by saying that those contracts are under the joint jurisdiction with the bankruptcy court. This bankruptcy isn’t a standard financial and legal because of the regulatory oversight at every level, keep that in mind when you read the headlines.
Newsom’s Next Move? Newsom should look towards FERC as the precedent for increasing his seat at the table. I realize that this is a political problem that was not planned for (or warranted some might say) and may be an issue that his administration would rather leave in the bankruptcy courts and at the CPUC. However, with the future of decarbonization in play, a worried set of labor unions and lives at stake, Newsom can still appoint a special cabinet position to ensure that the State of California and the consumers have a say in the process. Who will brief the governor and the legislature about the internal process? Who will ensure that consumers don’t get the short end of the stick? This week I will outline how I see this playing out, not just for PG&E but every integrated IOU in the Country.
If You Know Robo. You know that the following statement, said during the NextEra earnings call, would have gotten you banned from the executive building if said out loud just ten years ago. But this is a direct quote from NEE CEO Jim Robo, “We continue to believe that this [solar plus storage} will be massively disruptive to the nations generation fleet and create significant opportunities for renewable growth well into the next decade.”
Thank You Solar and Senator Reid. The US is exporting oil, which is solely due to the removal of the oil export embargo. And for that, you have to thank Senator Reid and solar because that was the trade for the ITC extension.
- SFChronicle: Tubbs Fire investigation clears PG&E, but uncertainty for utility remains
- Reuters: U.S. regulator sides with power suppliers over PG&E contracts
- Motley Fool: NextEra Energy (NEE) Q4 2018 Earnings Conference Call Transcript
- PV-Magazine: #Solar100’s Emily Kirsch – The Oprah of Clean Energy
- Axios: The U.S. as a net energy exporter will become the new normal
- Utilitydive: Tendril grows its load monitoring operations to help shift peak demand
- NYTimes: Germany Lays Out a Path to Quit Coal by 2038
Opinion
Have a great day!
Yann