CEOs of PG&E, Edison Cool on Draft Plan to Boost California Wildfire Fund
The CEOs of the two largest investor-owned utilities in California reacted cautiously on July 31 to a report that Gov. Gavin Newsom has floated a plan to have shareholders pony up billions to beef up the Golden State’s wildfire insurance fund.
Patti Poppe, leader of PG&E Corp., and Pedro Pizarro, president and CEO of Edison International Inc., both told analysts and investors that “the devil is in the details” of Newsom’s draft plan, which Bloomberg reported calls for ratepayers and the three investor-owned companies to each commit a total of $9 billion to the fund. The executives also voiced their confidence in the process landing at a good outcome—but also pushed back on the idea of asking investors for billions of up-front dollars.
“The state has a pattern of doing the right thing. Our legislative process is a little noisy. We do it out loud here in California, and it definitely is public,” Poppe said on PG&E’s second-quarter earnings call. “But the good news is that means it's transparent, and we'll get to the right end just like we have year after year after year after year.”
The Wildfire Insurance Fund was launched about five years ago and has been funded by $10.5 billion in contributions from Pacific Gas & Electric, SoCal Edison and San Diego Gas & Electric (which is owned by Sempra) as well as about $900 million annually from California customers. Its future has become a priority since January’s large wildfires in parts of the Los Angeles area—one of which Pizarro and his team have said was likely sparked by the company’s equipment—that are expected to drain most of the fund’s estimated $22 billion capacity, if not all of it.
Newsom’s plan could still change substantially, Bloomberg’s report noted, but Poppe and Pizarro indicated that, while they await many details to look over, they will not support some of the governor’s basic ideas. The CEOs and their lieutenants used very similar language to say that the wildfire fund doesn’t need cash today and that they won’t support a large up-front contribution.
Asked if it would be fair to assume that Edison would be asked to fork over a larger share of any amount the utilities would be called on to pay because of its role in the L.A. fires—as PG&E did in the wake of the late 2010s fires that precipitated the insurance fund’s formation—Pizarro said his team is “advocating to make sure there’s a fair allocation across all the customers involved and the shareholders involved” but also echoed Poppe’s language from earlier on July 31 in saying that Edison’s leaders will wait for a formal proposal to review.
“California has ultimately generally gotten it right,” Pizarro said. “Right now, we’re seeing proposals in Sacramento but we haven’t seen a final bill.”
Shares of PG&E (Ticker: PCG) ended July 31’s regular trading session flat at $14.02 (after being down 5% early in the day) and were down slightly after hours. Those of Edison (Ticker: EIX) were also down slightly after hours to $52.00. Both stocks are, however, down more than 30% since the beginning of the year.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications T&D World, Healthcare Innovation, IndustryWeek, FleetOwner and Oil & Gas Journal. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.