At a glance
- Fitch Ratings revised its outlook on PG&E Corp. and subsidiary PG&E Co. to negative from stable in September, holding the credit rating at BBB-, per a Sept. 16 note.
- For investors holding California utility debt or regulated-utility equity, the credit now turns on the legislative calendar rather than on operations.
- Poppe called the rating "a major issue that must be solved" and tied Fitch's move to customer cost: "inaction will continue to get increasingly expensive for our customers."
PG&E debt issued below investment grade since 2017 will cost customers an extra $4 billion in interest over its life, CEO Patti Poppe said on the utility's third-quarter earnings call, Utility Dive reported.
Fitch Ratings revised its outlook on PG&E Corp. and subsidiary PG&E Co. to negative from stable in September, holding the credit rating at BBB-, per a Sept. 16 note. Fitch attributed the change to Sacramento: the legislative session closed "with no meaningful progress towards a more durable solution to socialize wildfire liabilities."
For investors holding California utility debt or regulated-utility equity, the credit now turns on the legislative calendar rather than on operations. The $4 billion is the measurable piece, and Poppe argues it is reversible: interest the utility pays because it borrowed below investment grade, which she says good long-term policy could remediate immediately.
Poppe called the rating "a major issue that must be solved" and tied Fitch's move to customer cost: "inaction will continue to get increasingly expensive for our customers." She added later on the call, "It's very realistic that this business be investment-grade."
What PG&E is asking lawmakers for, according to its earnings presentation: a permanent source of liquidity beyond the Wildfire Fund, plus a maximum disallowance independent of funding source. Those are the two terms that would move the credit, and neither is in statute.
SB 492 and a 20% share-price drop
PG&E's stock fell 20% after California lawmakers advanced Senate Bill 492 without language shielding state utilities from wildfire liability, the report said. Negotiations carried into a special session, but the bill never received a final vote before the legislature ended its session in September.
Poppe said insurers also need to engage absent legislation, citing "insurance still needs to join in discussions about what is going to occur to make sure that claims are limited and our customers are not the infinite backstop for insured properties." She described those conversations as productive and continuing.
The next scheduled venue is an Oct. 29 joint hearing of the California legislature covering utilities, energy and insurance. Poppe said it is "intended to discuss subrogation" and that she expects continued talks with insurers and other stakeholders.
Reported by the Energy Transition desk. Published . Corrections