Latest news with #AB1054
Yahoo
23-05-2025
- Business
- Yahoo
PG&E (NYSE:PCG) Declares US$0.03 Per Share Dividend for Q2 2025
PG&E recently affirmed a regular cash dividend of $0.03 per share, which reflects its continuation of shareholder remuneration. Over the past quarter, PG&E's share price rose by 6% amid a fluctuating market backdrop marked by growing trade tensions and tech sector weakness. While the company's earnings report showed a decline in net income, its consistent dividend and updated earnings guidance for 2025 provided a stable outlook amid market volatility. In contrast, broader indices like the Dow Jones and S&P 500 experienced declines amidst geopolitical concerns and fluctuating economic indicators shaping investor sentiment during the same period. Every company has risks, and we've spotted 1 risk for PG&E you should know about. Uncover the next big thing with financially sound penny stocks that balance risk and reward. PG&E's reaffirmation of a $0.03 per share dividend caters to shareholder interests amidst fluctuating market conditions, underscoring its intent to provide stable returns. Over the longer term, PG&E's shares have achieved a total return of 46.44% over the past five years, offering context to its recent 6% increase in the past quarter. While the broader market indices like the Dow Jones and S&P 500 declined during the recent quarter, PG&E's consistent dividend may appeal to investors seeking stable returns, despite the company's negative earnings growth in the past year compared to the US Electric Utilities industry at 7.6%. The strategic capital investments and legislative resolution efforts highlighted in the narrative could significantly impact PG&E's revenue and earnings forecasts. The company's substantial $63 billion investment plan through 2028 aims to bolster infrastructure efficiency and earnings growth. However, uncertainties, such as the outcomes of AB 1054 and wildfire risks, could present hurdles. Given the current share price of US$17.04 and the consensus price target of US$20.83, there exists an expectation of an 18.2% rise, illustrating market optimism despite challenges. Investors should weigh these factors when considering PG&E's potential for long-term value creation. Click here and access our complete financial health analysis report to understand the dynamics of PG&E. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NYSE:PCG. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Edison's safety record declined last year. Executive bonuses rose anyway
The state law that shielded Southern California Edison and other utilities from liability for wildfires sparked by their equipment came with a catch: Top utility executives would be forced to take a pay cut if their company's safety record declined. Edison's safety record did decline last year. The number of fires sparked by its equipment soared to 178, from 90 the year before and 39% above the five-year average. Serious injuries suffered by employees jumped by 56% over the average. Five contractors working on its electric system died. As a result of that performance, the utility's parent company, Edison International, cut executive bonuses awarded for the 2024 year, it told California regulators in an April 1 report. For Edison International employees, planned executive cash bonuses were cut by 5%, and executives at Southern California Edison saw their bonuses shrink by 3%, said Sergey Trakhtenberg, a compensation specialist for the company. But cash bonuses for four of Edison's top five executives actually rose last year, by as much as 17%, according to a separate March report by Edison to federal regulators. Their long-term bonuses of stock and options, which are far more valuable and not tied to safety, also rose. Of the top five executives, only Pedro Pizarro, chief executive of Edison International, saw his cash bonus decline. He received a cash bonus of 128% of his salary rather than the planned 135% because of the safety failures, the company said, for total compensation including salary of $13.8 million. The cash bonuses increased for the other top four executives despite the safety-related deductions because of how they performed on other responsibilities, said Trakhtenberg, Edison's director of total rewards. He said bonuses would have been higher were it not for safety-related reductions. 'Compensation is structured to promote safety,' Trakhtenberg said, calling it 'the main focus of the company.' Consumer advocates say the fact that bonuses increased in spite of the decline in safety highlights a flaw in AB 1054, the 2019 law that reduced the liability of for-profit utility companies like Edison for damaging wildfires ignited by their equipment. AB 1054 created a wildfire fund to pay for fire damages in an effort to ensure that utilities wouldn't be rendered insolvent by having to bear billions of dollars in damage costs. In return, the legislation said executive bonus plans for utilities should be 'structured to promote safety as a priority and to ensure public safety and utility financial stability.' 'All these supposed accountability measures that were put into the bill are turning out to be toothless,' said Mark Toney, executive director of The Utility Reform Network, a consumer advocacy group in San Francisco. 'If executives aren't feeling a significant reduction in salary when there is a significant increase in wildfire safety incidents,' Toney said, 'then the incentive is gone.' One of the executives who received an increased cash bonus was Adam Umanoff, Edison's general counsel. Umanoff was expected to get 85% of his $706,000 salary, or $600,000, as a cash bonus as his target at the year's beginning. The deduction for safety failures reduced that bonus, Trakhtenberg said. But Umanoff's performance on other goals 'was significantly above target' and thus increased his cash bonus to 101% of his salary. So despite the safety failures, Umanoff received a cash bonus of $717,000, or 19% higher than he was expected to receive. 'If you can just make it up somewhere else,' Toney said, 'the incentive is gone.' The utility recently told its investors that AB 1054 will protect it from potential liabilities of billions of dollars if its equipment is found to have sparked the Eaton fire on Jan. 7, resulting in 18 deaths and the destruction of thousands of homes and commercial buildings. The cause of the blaze, which videos captured igniting under one of Edison's transmission towers, is still under investigation. Pizarro has said the reenergization of an idle transmission line is now a leading theory of what sparked the deadly fire. The 2019 legislation was passed in a matter of weeks to bolster the financial health of the state's for-profit electric companies after the Camp fire in Butte County, which was caused by a Pacific Gas & Electric transmission line. The wildfire destroyed the town of Paradise and killed 85 people, and the damages helped push PG&E into bankruptcy. At the bill-signing ceremony, Gov. Gavin Newsom touted its language that said utilities could not access the money in a new state wildfire fund and cap their liabilities from a blaze caused by their equipment unless they tied executive compensation to their safety performance. In April, Edison filed its mandatory annual safety performance metrics report with the Public Utilities Commission as it seeks approval to raise customer electric rates by more than 10% this year. In the report, Edison said that because its safety record worsened in 2024 on certain key metrics, its executives took 'a total deduction of 18 points' on a 100-point scale used in determining bonuses. 'Safety and compliance are foundational to SCE, and events such as employee fatalities or serious injuries to the public can result in meaningful deduction or full elimination' of executive incentive compensation, the company wrote. Read more: Edison customers are paying more for fire prevention. So why are there more fires? Edison didn't explain in the report what an 18-point deduction meant to executives in actual dollar terms, another point of frustration with consumer advocates trying to determine if executive compensation plans genuinely comply with AB 1054. 'Without seeing dollar figures, it is impossible to ascertain whether a utility's incentive compensation plan is reasonable,' the Public Advocates Office at the state Public Utilities Commission wrote in a 2022 letter to wildfire safety regulators. To try to determine how much the missed safety goals actually impacted the compensation of Edison executives last year, The Times looked at a separate federal securities report Edison filed for investors known as the proxy statement. In that March report, Edison detailed how the majority of its compensation to executives is based on its profit and stock price appreciation, and not safety. Safety helps determine about 50% of the cash bonuses paid to executives each year, the report said. But more valuable are the long-term incentive bonuses, which are paid in shares of stock and stock options and are based on earnings. The Utility Reform Network, which is also known as TURN, pointed to those stock bonuses in a 2021 letter to regulators where it questioned whether Edison and the state's other two big for-profit utilities were actually tying executive compensation to safety. 'Good financial performance does not necessarily mean that the utility prioritizes safety,' TURN staff wrote in the letter. Trakhtenberg disagreed, saying the company's 'long-term incentives are focused on promoting financial stability.' A key part of that is the company's ability 'over the long term to safely deliver reliable, affordable power,' he said. Trakhtenberg noted that the state Office of Energy Infrastructure Safety had approved the company's executive compensation plan in October, saying it met the requirements of AB 1054, as well as every year since the agency was established in July 2021. The Times asked the energy safety office if it audited the utilities' compensation reports or tried to determine how much money Edison executives lost because of the safety failures. Sandy Cooney, a spokesman for the agency, said that the office had 'no statutory authority … to audit executive compensation structures.' He referred the reporter to Edison for information on how much executive compensation had actually declined in dollar amounts because of the missed safety goals. Read more: Regulators criticized Edison's wildfire safety actions months before deadly Eaton fire A committee of Edison board members determines what goals will be tied to safety, Trakhtenberg said, and whether those goals have been met. Even though five contractors died last year while working on Edison's electrical system, the committee didn't include contractor safety as a goal, according to the company's documents. And the committee said the company met its goal in protecting the public even though three people died from its equipment and there was a 27% increase in deaths and serious injuries among the public compared to the five-year average. Trakhtenberg said most of the serious injuries happened to people committing theft or vandalism, which is why the committee said the goal had been met. Edison has told regulators that if its equipment starts a catastrophic wildfire, the committee could decide to eliminate executives' cash bonuses. But the company's documents show that it hasn't eliminated or even reduced bonuses for the 2022 Fairview fire in Riverside County, which killed two people, destroyed 22 homes and burned 28,000 acres. In 2023, investigators blamed Edison's equipment for igniting the fire, saying one of its conductors came in contact with a telecommunications cable, creating sparks that fell into vegetation. Trakhtenberg said the board's compensation committee reviewed the circumstances of the fire that year and found that the company had acted 'prudently' in maintaining its equipment. The committee decided not to reduce executive bonuses for the fire, he said. In March, the Public Utilities Commission fined Edison $2.2 million for the fire, saying it had violated four safety regulations, including by failing to cooperate with investigators. Trakhtenberg said the compensation committee would reconsider its decision not to penalize executives for the deadly fire at its next meeting. TURN has repeatedly asked regulators not to approve Edison's compensation plans, detailing how its committee has 'undue discretion' in setting goals and then determining whether they have been met. But the energy safety office has approved the plans anyway. Toney said he believes the responsibility for reviewing the compensation plans and utilities' wildfire safety should be transferred back to the Public Utilities Commission, which had done the work until 2021. The energy safety office has rules that make the review process less transparent than it is at the commission, he said. 'The whole process, we feel is rigged heavily in favor of utilities,' he said. This story originally appeared in Los Angeles Times.
Los Angeles Times
18-05-2025
- Business
- Los Angeles Times
Edison's safety record declined last year. Executive bonuses rose anyway
The state law that shielded Southern California Edison and other utilities from liability for wildfires sparked by their equipment came with a catch: Top utility executives would be forced to take a pay cut if their company's safety record declined. Edison's safety record did decline last year. The number of fires sparked by its equipment soared to 178, from 90 the year before and 39% above the five-year average. Serious injuries suffered by employees jumped by 56% over the average. Five contractors working on its electric system died. As a result of that performance, the utility's parent company, Edison International, cut executive bonuses awarded for the 2024 year, it told California regulators in an April 1 report. For Edison International employees, planned executive cash bonuses were cut by 5%, and executives at Southern California Edison saw their bonuses shrink by 3%, said Sergey Trakhtenberg, a compensation specialist for the company. But cash bonuses for four of Edison's top five executives actually rose last year, by as much as 17%, according to a separate March report by Edison to federal regulators. Their long-term bonuses of stock and options, which are far more valuable and not tied to safety, also rose. Of the top five executives, only Pedro Pizarro, chief executive of Edison International, saw his cash bonus decline. He received a cash bonus of 128% of his salary rather than the planned 135% because of the safety failures, the company said, for total compensation including salary of $13.8 million. The cash bonuses increased for the other top four executives despite the safety-related deductions because of how they performed on other responsibilities, said Trakhtenberg, Edison's director of total rewards. He said bonuses would have been higher were it not for safety-related reductions. 'Compensation is structured to promote safety,' Trakhtenberg said, calling it 'the main focus of the company.' Consumer advocates say the fact that bonuses increased in spite of the decline in safety highlights a flaw in AB 1054, the 2019 law that reduced the liability of for-profit utility companies like Edison for damaging wildfires ignited by their equipment. AB 1054 created a wildfire fund to pay for fire damages in an effort to ensure that utilities wouldn't be rendered insolvent by having to bear billions of dollars in damage costs. In return, the legislation said executive bonus plans for utilities should be 'structured to promote safety as a priority and to ensure public safety and utility financial stability.' 'All these supposed accountability measures that were put into the bill are turning out to be toothless,' said Mark Toney, executive director of The Utility Reform Network, a consumer advocacy group in San Francisco. 'If executives aren't feeling a significant reduction in salary when there is a significant increase in wildfire safety incidents,' Toney said, 'then the incentive is gone.' One of the executives who received an increased cash bonus was Adam Umanoff, Edison's general counsel. Umanoff was expected to get 85% of his $706,000 salary, or $600,000, as a cash bonus as his target at the year's beginning. The deduction for safety failures reduced that bonus, Trakhtenberg said. But Umanoff's performance on other goals 'was significantly above target' and thus increased his cash bonus to 101% of his salary, So despite the safety failures, Umanoff received a cash bonus of $717,000, or 19% higher than he was expected to receive. 'If you can just make it up somewhere else,' Toney said, 'the incentive is gone.' The utility recently told its investors that AB 1054 will protect it from potential liabilities of billions of dollars if its equipment is found to have sparked the Eaton fire on Jan. 7, resulting in 18 deaths and the destruction of thousands of homes and commercial buildings. The cause of the blaze, which videos captured igniting under one of Edison's transmission towers, is still under investigation. Pizarro has said the reenergization of an idle transmission line is now a leading theory of what sparked the deadly fire. The 2019 legislation was passed in a matter of weeks to bolster the financial health of the state's for-profit electric companies after the Camp fire in Butte County, which was caused by a Pacific Gas & Electric transmission line. The wildfire destroyed the town of Paradise and killed 85 people, and the damages helped push PG&E into bankruptcy. At the bill-signing ceremony, Gov. Gavin Newsom touted its language that said utilities could not access the money in a new state wildfire fund and cap their liabilities from a blaze caused by their equipment unless they tied executive compensation to their safety performance. In April, Edison filed its mandatory annual safety performance metrics report with the Public Utilities Commission as it seeks approval to raise customer electric rates by more than 10% this year. In the report, Edison said that because its safety record worsened in 2024 on certain key metrics, its executives took 'a total deduction of 18 points' on a 100-point scale used in determining bonuses. 'Safety and compliance are foundational to SCE, and events such as employee fatalities or serious injuries to the public can result in meaningful deduction or full elimination' of executive incentive compensation, the company wrote. Edison didn't explain in the report what an 18-point deduction meant to executives in actual dollar terms, another point of frustration with consumer advocates trying to determine if executive compensation plans genuinely comply with AB 1054. 'Without seeing dollar figures, it is impossible to ascertain whether a utility's incentive compensation plan is reasonable,' the Public Advocates Office at the state Public Utilities Commission wrote in a 2022 letter to wildfire safety regulators. To try to determine how much the missed safety goals actually impacted the compensation of Edison executives last year, The Times looked at a separate federal securities report Edison filed for investors known as the proxy statement. In that March report, Edison detailed how the majority of its compensation to executives is based on its profit and stock price appreciation, and not safety. Safety helps determine about 50% of the cash bonuses paid to executives each year, the report said. But more valuable are the long-term incentive bonuses, which are paid in shares of stock and stock options and are based on earnings. The Utility Reform Network, which is also known as TURN, pointed to those stock bonuses in a 2021 letter to regulators where it questioned whether Edison and the state's other two big for-profit utilities were actually tying executive compensation to safety. 'Good financial performance does not necessarily mean that the utility prioritizes safety,' TURN staff wrote in the letter. Trakhtenberg disagreed, saying the company's 'long-term incentives are focused on promoting financial stability.' A key part of that is the company's ability 'over the long term to safely deliver reliable, affordable power,' he said. Trakhtenberg noted that the state Office of Energy Infrastructure Safety had approved the company's executive compensation plan in October, saying it met the requirements of AB 1054, as well as every year since the agency was established in July 2021. The Times asked the energy safety office if it audited the utilities' compensation reports or tried to determine how much money Edison executives lost because of the safety failures. Sandy Cooney, a spokesman for the agency, said that the office had 'no statutory authority … to audit executive compensation structures.' He referred the reporter to Edison for information on how much executive compensation had actually declined in dollar amounts because of the missed safety goals. A committee of Edison board members determines what goals will be tied to safety, Trakhtenberg said, and whether those goals have been met. Even though five contractors died last year while working on Edison's electrical system, the committee didn't include contractor safety as a goal, according to the company's documents. And the committee said the company met its goal in protecting the public even though three people died from its equipment and there was a 27% increase in deaths and serious injuries among the public compared to the five-year average. Trakhtenberg said most of the serious injuries happened to people committing theft or vandalism, which is why the committee said the goal had been met. Edison has told regulators that if its equipment starts a catastrophic wildfire, the committee could decide to eliminate executives' cash bonuses. But the company's documents show that it hasn't eliminated or even reduced bonuses for the 2022 Fairview fire in Riverside County, which killed two people, destroyed 22 homes and burned 28,000 acres. In 2023, investigators blamed Edison's equipment for igniting the fire, saying one of its conductors came in contact with a telecommunications cable, creating sparks that fell into vegetation. Trakhtenberg said the board's compensation committee reviewed the circumstances of the fire that year and found that the company had acted 'prudently' in maintaining its equipment. The committee decided not to reduce executive bonuses for the fire, he said. In March, the Public Utilities Commission fined Edison $2.2 million for the fire, saying it had violated four safety regulations, including by failing to cooperate with investigators. Trakhtenberg said the compensation committee would reconsider its decision not to penalize executives for the deadly fire at its next meeting. TURN has repeatedly asked regulators not to approve Edison's compensation plans, detailing how its committee has 'undue discretion' in setting goals and then determining whether they have been met. But the energy safety office has approved the plans anyway. Toney said he believes the responsibility for reviewing the compensation plans and utilities' wildfire safety should be transferred back to the Public Utilities Commission, which had done the work until 2021. The energy safety office has rules that make the review process less transparent than it is at the commission, he said. 'The whole process, we feel is rigged heavily in favor of utilities,' he said.
Los Angeles Times
30-03-2025
- Business
- Los Angeles Times
Edison customers are paying more for fire prevention. So why are there more fires?
Southern California Edison's electric equipment continues to spark scores of wildfires in its territory, even though the utility has spent billions of dollars on prevention measures that are costing the average customer more than $300 a year. Edison's spending on insulated wires, tree trimming, weather stations and increased equipment inspections now accounts for roughly 15% of the average utility bill, up from 9% two years ago, according to the state Public Utilities Commission's public advocates office. The company dedicated $1.9 billion for wildfire-related spending last year, up 29% from the year before, according to state officials. Every month, $26 of the average customer bill — now $175 — goes to cover those costs. Despite that spending, there were 178 wildfires sparked last year by equipment owned by Edison, which serves 15 million people in Southern and Central California, according to data the utility reports to the state. That's up from 107 in 2015. 'We are spending tens of billions of dollars to not be one whit more safe,' said Loretta Lynch, former president of the Public Utilities Commission. Lynch and others say much of the blame goes to a state law signed by Gov. Gavin Newsom in 2019 known as AB 1054 that limited the financial liability of utilities for wildfires they caused. By allowing utilities to shift the cost of damages from wildfires to customers, even when the blazes were caused by company mistakes, the utilities have less of an incentive to mitigate wildfire risks, Lynch said. At the same time, state auditors have faulted utility regulators for not ensuring the companies' fast-rising spending to prevent wildfires was effective. Edison's actions to prevent wildfires have come under scrutiny in the wake of the devastating Eaton wildfire that killed 17 people and destroyed 10,000 homes and other structures. Scores of lawsuits have been filed against the Rosemead-based utility and its parent company, Edison International, saying its equipment sparked the conflagration. Videos captured the inferno igniting on Jan. 7 under one of the company's transmission towers in Eaton Canyon. Edison said it is investigating the cause of the Eaton fire, but said that the effort is in the early stages and could take 18 months to complete. 'We are focused on a thorough and transparent investigation,' a company spokesperson said. Edison executives say the costs of tree trimming and other work have made customers safer. They have repeatedly touted those efforts to the company's investors, saying the work has reduced the risk of a catastrophic wildfire by more than 85% since 2017. In a recent interview, Raymond Fugere, a top Edison wildfire safety executive, said the 85% figure is based on a number of factors, including analyses by the company and third parties of the effectiveness of its fire prevention work. Edison increased its fire-prevention spending in the wake of devastating California wildfires in 2017 and 2018. Since then, the company installed 6,400 miles of fire-resistant insulated power lines, removed trees, increased inspections in areas at high risk of wildfire and added AI-enabled cameras to spot wildfires. 'If it wasn't for a lot of these mitigations, there could have been more fires,' Fugere said. 'We keep working and are trying to harden that system to protect the customers.' Scientists say that climate change has exacerbated the risks from wildfires in California by creating hotter and drier fire seasons. Fugere said the number of ignitions caused by Edison's infrastructure, which are mostly small fires that don't spread, go up and down each year because they tend to vary with the weather. That was the case, he said, when ignitions jumped from 90 in 2023 to 178 in 2024. 'In 2024 we had a heavy rain in a very short period of time,' he said. 'And then it kind of dried out. And so you had all this growth of vegetation … Weather is really the big thing.' Even so, there are still dozens of wildfires every year that are sparked by equipment operated by Edison and the state's other two big investor-owned utilities, Pacific Gas & Electric and San Diego Gas & Electric. The state's Wildfire Safety Advisory Board reviewed the annual fire ignition figures from the three big utilities on Dec. 4. Jessica Block, a UC San Diego scientist who chairs the board, said it 'didn't look like a whole lot of progress was being made' toward fire prevention. The 2019 law, AB 1054, slashed utilities' liability for fires caused by their equipment. It changed the law so that such companies are now automatically deemed to have acted 'prudently' as long as they've obtained an annual safety certification from state regulators prior to any fire. Practically, that means the utility companies must still pay for $1 billion in wildfire insurance coverage. But any damages to those affected by wildfires caused by their equipment that tops $1 billion will now be covered by a state fund that was $12 billion as of January and is eventually targeted to reach $21 billion. Half of the initial money in the fund came from shareholders of the three big utilities. The rest comes from a monthly charge on customer bills. Edison has credited AB 1054 with significantly limiting the company's liability for wildfires that its equipment ignites. In a securities filing last year, Edison said that because of AB 1054, any uninsured costs from wildfires after the law's adoption in July 2019 'are probable of recovery through electric rates' — rates that are paid by its customers. One question facing Edison now is potential liability from the Eaton fire. It has told its investors that AB 1054 and the safety certificate granted to it by California regulators in October will ease the possible financial hit. Damage from both the Eaton and Palisades fires in January has been estimated at more than $250 billion dollars. The company said in a presentation to Wall Street analysts on Feb. 27 that if its equipment is found to have started the Eaton fire, it wouldn't have to reimburse the state wildfire fund for claims paid to victims unless outside parties could raise 'serious doubt' that it had acted prudently. Even if that happened, the company said, the law would cap its liability to $3.9 billion. Regulators from the state Office of Energy Infrastructure Safety granted Edison a safety certificate on Oct. 31 — despite a myriad of problems they found in its fire prevention work. For example, the regulators said the company had not considered rare high wind events in their calculations of how to stop electrical equipment-caused fires. The company looked at high-wind events over the past 20 years, instead of a longer period. The company 'may be underestimating risks of ignition and high consequence, and therefore not hardening these assets because they are not identified,' the office wrote. According to the report, the company also had thousands of open work orders to fix equipment problems found in inspections. The Times detailed this month that Edison had dozens of pending work orders for clearing vegetation and other critical work on three transmission lines near the ignition site of the Eaton fire. April Maurath Sommer, executive director of the Wild Tree Foundation, a nonprofit environmental group, said that state officials responsible for overseeing fire prevention efforts by utilities have relaxed their standards following adoption of AB 1054. Before the law was passed, the commission held public hearings on utilities' fire prevention efforts and the cost, she said. That no longer happens. 'There's been a rollback of scrutiny,' she said. A report by the California state auditor in March 2022 faulted the Office of Energy Infrastructure Safety for issuing safety certificates to utilities despite serious deficiencies in the latter's plans for reducing wildfire risk. A spokesperson for the Energy Safety office declined to address why Edison's safety certificate was approved despite problems identified by its staff. In a statement, he said AB 1054 had reduced wildfire risk, including by prompting the utilities to replace aging equipment and increase the frequency of inspections. The state Public Utilities Commission, which operates separately from the energy safety office, has the responsibility to evaluate whether wildfire prevention costs charged to customers are reasonable. It also has authority to fine utilities when they violate safety regulations. The auditors criticized the utilities commission for not holding the electric companies accountable. The commission 'does not use its authority to penalize utilities when its audits uncover violations,' the auditors wrote. Asked about that criticism, commission spokeswoman Terrie Prosper told The Times that the agency often sends a notice to utilities in violation of these rules, which gives them the opportunity to quickly correct problems without a citation or penalty. An Edison representative said in response to the problems found by regulators, it now uses 40 years of wind history — instead of 20 — in its safety plans, and that it also follows state regulations in inspecting and prioritizing repairs. In 2019, when AB 1054 was passed, PG&E had declared bankruptcy because of liabilities it faced from devastating wildfires, including the Camp fire in 2018, which destroyed the town of Paradise and killed 85 people. Early in 2019, the utilities asked lawmakers for liability protections that they said would strengthen them financially and ultimately help customers. For example, Edison told state officials in February 2019 that utilities 'should be deemed a prudent operator' and be allowed to recover costs from the fund if regulators had approved its wildfire mitigation plan. At the time the law was being debated, critics pointed out that a decade earlier the Public Utilities Commission had rejected the utilities' proposal to have ratepayers cover all damages from wildfires because of the 'limitless potential' for those costs to be shifted to customers. Staff pointed out it would invite lawsuits by those who said they were damaged by fires, while reducing utilities' incentive to prevent the fires. Despite those concerns, AB 1054 was drafted and passed in a matter of weeks. 'The fund is protecting credit ratings of the utilities, but it does not protect public safety,' said Maurath Sommer of the Wild Tree Foundation. Daniel Villasenor, a spokesman for Newsom, declined to answer questions but said in a statement that AB 1054 'is smart policy that has saved ratepayers and wildfire survivors billions while holding utilities accountable to some of the strongest safety standards in the nation.' At a Feb. 19 committee hearing in the California Assembly, an Edison executive explained how the utility has decreased the risk of wildfire in recent years by looking into the root cause of each fire its equipment starts. Not all the committee members were convinced. 'How long are we going to let them just figure it out and maybe not figure it out, maybe cause some huge disasters before they have some skin in the game too?' Assemblymember Pilar Schiavo (D-Chatsworth) said at the hearing. 'It feels like they're giving dividends to their investors and raising rates on our constituents and then we have to cover…what seems like some negligence on a semi-regular basis,' she said. 'We have to rebalance this equation,' she said.
Yahoo
29-03-2025
- Business
- Yahoo
Moody's upgrades PG&E on reduced credit risks from wildfires
This story was originally published on Utility Dive. To receive daily news and insights, subscribe to our free daily Utility Dive newsletter. Moody's Ratings on Thursday upgraded credit ratings for PG&E Corp. and its Pacific Gas & Electric subsidiary, saying the companies faced reduced financial risks from wildfires. "PG&E's upgrade reflects the organization's continued improvement in mitigating wildfire risk over the last few years as well as its ability to strengthen both its financial profile and its relationships with key stakeholders," Jeff Cassella, Moody's Ratings vice president and senior credit officer, said in a press release. The upgrade also reflects the credit quality benefits provided by California's $21 billion wildfire legislation (AB 1054), including continued access to the state's wildfire insurance fund and credit positive shareholder liability cap and cost recovery provisions, Cassella said. 'In the backdrop of the recent LA wildfires, we expect any legislative and regulatory actions resulting from the state's continued wildfire risk will remain supportive for utilities by protecting them from uncapped liabilities due to inverse condemnation," Cassella said. Since PG&E emerged from a wildfire-related bankruptcy in 2020, the utility has spent more than $20 billion to reduce wildfire risks, including the risk its equipment will cause wildfires, according to the credit rating agency. The utility hasn't experienced any wildfires that significantly affected its finances since 2020, Moody's noted. Also, PG&E's financial risks are muted by the utility's demonstrated ability to receive approvals for the utility's annual wildfire safety certificate, which allows for the presumption of PG&E's prudence and protects the company with a liability cap on reimbursement to the wildfire fund if it is found imprudent, Moody's said. PG&E's liability cap is about $4.1 billion, according to Moody's. Although the state's wildfire fund may be used to cover damages from January fires in southern California, Moody's said it expects the remaining amount would be enough to support PG&E's credit ratings and credit quality. 'Further upward movement of PG&E's ratings will be dependent on future increases in the amount available in the fund and the incorporation of a replenishment mechanism or other enhancements following the most recent wildfires,' Moody's said. Moody's said PG&E is improving its relationship with customers by reducing wildfire risk, including with more targeted and narrower public safety power shut-offs. Moody's also increased the company's 'management credibility and track record' score to reflect PG&E's improved operational and financial performance in recent years and its stronger relationship with key stakeholders. In its rating actions, Moody's upgraded PG&E Corp.'s senior secured debt ratings one notch to Ba2 from Ba3. Ba ratings are Moody's highest credit tier among non-investment grade ratings, according to a summary of the rating agency's credit scale. Moody's also upgraded PG&E's ratings, including by increasing the utility's senior secured first mortgage bonds rating to Baa1 from Baa2. Baa ratings are considered to be investment grade obligations with moderate credit risk. Separately, California Gov. Gavin Newsom, D, on Thursday suspended certain permitting requirements to make it easier for Southern California Edison and the Los Angeles Department of Water and Power to rebuild electric facilities and move power lines underground. Wildfires in January burned about 47,900 acres in the Los Angeles area and destroyed or damaged about 16,250 buildings, according to Newsom. Recommended Reading Insurance — public or private — likely won't stop utility wildfire risks, experts say
