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PG&E Execs in Talks with Seven Firms on Undergrounding Plan

Nov. 1, 2021
CEO Poppe: ‘We can’t wait to share what that project ramp looks like.’

The leaders of Pacific Gas Electric Co. are in talks with seven companies about their plans to underground 10,000 miles of power lines in California.

Announced in late July, the PG&E plan is the largest U.S. effort of its kind and a key part of the utility’s plan to reduce its wildfire risk. If completed as envisioned, it would put underground 40% of PG&E overhead distribution power lines in areas with the three highest fire threats. In all, the company maintains more than 25,000 miles of overhead lines in such areas.

Speaking to analysts and investors after reporting results for PG&E’s parent company, CEO Patti Poppe said the company received 25 responses to its request for information on how to broadly carry out its plan. (PG&E expects to underground only about 100 miles this year.) That list, Poppe said, has been narrowed to seven firms with whom PG&E is now holding face-to-face discussions.

“We feel more convicted than ever that this is an important part of the solution,” said Poppe, whose predecessors filed for protection from creditors in early 2019 in the face of what they estimated would be up to $30 billion in claims from wildfires the two years prior.

“We’re at a very project-by-project basis now,” Poppe added later during the call. “We can’t wait to share with everyone what that project ramp looks like.”

Among the things Poppe is bullish about is the chance to lower installation costs because of the scale of PG&E’s aims. A recent small project, she said, cost between $2.5 million and $2.7 million per mile, implying a total cost of more than $25 billion for the 10,000 miles of construction. But rolling out such work on a large scale, she added, would bring with it “a tremendous opportunity” to lower that number.

CFO Chris Foster added that, given the size of the project ahead, it would be “natural” to have several providers working on it. Neither executive provided a possible timeline for making decisions about who those firms will be and when they might get started on large-scale work.

PG&E reported a net loss of nearly $1.1 billion in the third quarter, a number that included nearly $1.6 billion worth of one-time items, primarily bankruptcy and legal costs. Poppe and her team also booked a $1.15 billion charge related to the five-county Dixie fire this summer but expect to over time be able to recover those losses through various mechanisms.

PG&E shares (Ticker: PGC) were down slightly Nov. 1 to about $11.45. They are essentially unchanged versus six months ago.

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