PG&E Corp. CEO Patti Poppe said Oct. 27 that the utility’s work on underground high-risk power lines has become substantially more efficient this year and will continue to do so thanks to a new legislative tailwind.
The team at Oakland-based PG&E early this year said they plan to underground about 3,600 miles of power lines by the end of 2026 and want to grow that number to 10,000 miles over time. The undergrounding work is one of several key elements of PG&E’s broader plan to reduce fire risk from its infrastructure – the California Public Utility Commission this week proposed fining the company $155 million for its role in the 2020 Zogg fire – and recently received a boost from the passage of a state bill accelerating the burying of power lines.
Poppe said the bill will help her team schedule out future investments and added that the company will next year propose to the CPUC a 10-year undergrounding plan.
“Fundamentally, we can have better workforce planning. We can have better equipment. We can have better long-term contracts,” Poppe said on a conference call with analysts. “And we know that all of that results in savings for customers.”
Early this year, Poppe said PG&E’s target cost per mile of undergrounding in 2022 was $3.75 million and that the company was forecasting that number would trend toward $2.5 million by 2026. (Data collected from PG&E, San Diego Gas & Electric and Southern California Edison by the CPUC for its analysis of the recently passed bill put the range of undergrounding costs at $1.85 million to $6.1 million.) But PG&E’s work this year on 165 miles that have been completed – 10 more miles should be finished by year-end – has brought with it major improvements.
“Many of those miles are coming in closer to the $2.5 million a mile than the original $3.7 million a mile,” Poppe said.
PG&E posted a third-quarter net profit of $459 million on total operating revenues of $5.4 billion. The former reversed a year-ago loss of more than $1 billion while the latter was down slightly from the third quarter of 2021. Adjusted earnings came in $608 million versus $479 million a year earlier.
Those numbers and a positive outlook for growth in the company’s California service area have given Poppe and CFO Chris Foster confidence to, in addition to forecasting 2023 per-share profit growth of about 10%, lift their rate base growth outlook to 9.5% from 9%.
Shares of PG&E (Ticker: PCG) rose nearly 1.5% Oct. 27 following the earnings report. Over the past six months, they have climbed nearly 20%, growing the company’s market capitalization to about $38 billion.
