January 30, 2019 Read More →

In restructuring, PG&E ‘will have to cater to customers who have other ways to meet their power needs’

Wall Street Journal:

When it emerges from what is expected to be a long and complex chapter 11 reorganization, it’s likely to be a very different business—no longer the sprawling provider of natural gas and electric service to 16 million Californians.

While wildfire liabilities that PG&E pegged at more than $30 billion were the main factor behind its bankruptcy filing, the San Francisco-based company faces far broader challenges. Long a utility accustomed to having a monopoly, in the future it will have to cater to customers who have other ways to meet their power needs.

The traditional business model of electric utilities is under siege as homeowners, corporations and new community groups seek to generate or purchase power for themselves, a trend that is particularly advanced in California. All the while, PG&E has become deeply intertwined with California’s renewable energy and carbon-reduction goals, requiring it to sign expensive long-term contracts while also facing political pressure to keep rates from rising too fast.

All options are going to be on the table in a bankruptcy proceeding, experts say. The possibilities include breaking up the company, selling off its natural-gas business or shedding some of its more than 100 hydroelectric dams. San Francisco and other cities have also said they want to explore running their own utilities in what has been PG&E territory.

All options are going to be on the table in a bankruptcy proceeding, experts say. The possibilities include breaking up the company, selling off its natural-gas business or shedding some of its more than 100 hydroelectric dams. San Francisco and other cities have also said they want to explore running their own utilities in what has been PG&E territory.

“There’s a larger issue at hand regarding how utilities are coping with new technology,” Mr. Peskoe said. “Maybe this is an opportunity for the industry to think about this differently.”

PG&E said in the bankruptcy filing that it wants the ability to end hundreds of long-term power contracts with wind and solar farms, a move that could hurt the nation’s renewable-energy industry. PG&E has $42 billion in contractual commitments to buy electricity, more than half for wind and solar power to meet California’s aggressive renewable-energy goals. NextEra Energy Inc., a Florida utility with a large renewable-power-generation business has asked the Federal Energy Regulatory Commission to assert jurisdiction over these contracts. The commission ruled last week that it would review the matter alongside the bankruptcy judge.

California Gov. Gavin Newsom has also expressed worries about the potential cancellation of the contracts, which could hurt the state’s ability to meet aggressive goals to cut greenhouse-gas emissions and combat climate change.

More($): Wildfires Drove PG&E to Bankruptcy, Where Utility Must Change to Survive

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