PG&E Corp. teams are refining their processes for undergrounding power lines, a process that could save them hundreds of millions of dollars.
During a quarterly earnings conference call in which she and her lieutenants also touted other cost-saving initiatives, PG&E CEO Patti Poppe said the Oakland-based utility is on track to hit its annual goal of lowering non-fuel operations and maintenance spending by at least 2%. That’s thanks in part to several waste reduction programs that include field work on undergrounding. (Another such option, digitizing or eliminating letters to households, would save $4 million annually in postage costs per mailing.)
Poppe said a review of regulations, PG&E construction practices as well as those of other utilities showed that the company’s standard of requiring 36 inches of cover for conduits was rarely required. So the company several months ago reduced its cover requirement to 30 inches where allowed.
“While these may not seem like much, this six-inch change in depth reduces the labor hours required to install our underground conduits and reduces the amount of spoils created during our trenching activities by approximately 17%,” Poppe said. “We're estimating that this change of 6 inches will save at least $25 million in 2023 alone.”
That $25 million in savings this year covers a planned 350 miles of underground that PG&E teams are targeting. Extrapolated across the company’s long-term goal of undergrounding 10,000 miles of lines across its service territory, the savings would grow to more than $700 million—or roughly 40% of the company’s annual operating income.
Poppe said PG&E’s teams are studying the option of further adjusting conduit depths to 24 inches when appropriate as part of a broader exercise to add efficiencies to their processes as they ramp up. As part of its plan to get to 10,000 miles, the company is aiming to underground 450 miles of power lines next year and 550 and 750 miles in 2025 and 2026, respectively.
Among the other items discussed on the first-quarter earnings call—net income was $572 million (versus $478 million in early 2022) as the company’s operating revenues climbed 7% to $6.2 billion–was a delay to the process of selling up to half of a subsidiary housing the company’s non-nuclear generation assets. An administrative law judge in late March added about a month to the timeline to receive comments, which means it will be early 2024 before a proposed decision gets handed down. Poppe and her team had initially aimed to complete a sale by the end of this year.
New CFO Carolyn Burke told analysts PG&E has seen “pretty robust” interest from potential buyers and said long-term infrastructure investors appear most interested. The plan, she added, is to formally go to market early this summer.
Shares of PG&E (Ticker: PCG) finished the trading week at $17.27, essentially flat from the previous Friday. Over the past six months, they have climbed about 15%, growing the company’s market capitalization to nearly $43 billion.