PCG 2Q2018 Earnings (7/26/2018): Wildfires continue to cloud and upside still alluring but months away

Despite wildfires issues, PCG continues to quietly execute delivering 2Q18 AEPS at $1.16 vs. our $0.87, and $0.94 consensus
While wildfire issues continue to dominate, we believe investors should focus …
But, while focus remains on wildfires, we believe PCG would …
However, we feel upside’s …, and we believe bankruptcy risk …
Also, while we are … about past liabilities, we … legislative remedies for future wildfire liabilities are …
Through early 2019, we’d advise …, but once …, we feel PCG presents … investment …
Capex plan for 2018 remains unchanged at $6.3B, but PCG sounding potential for … revision
ST-Target … $XX/share but our NIV … $XXX/share

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Auvila Flash PCG (06/11/2018): CalFire finds PG&E equipment involved in additional October 2017 fires; PG&E to take “significant” reserves

Facts and Figures

CalFire released additional findings on 13 additional wildfires that started in October 2017
CalFire found that in 3 of the 13 fires that PG&E equipment was a direct cause of those fires; meaning, the direct failure (e.g., a pole collapsing, a line separating, etc.) of the utility’s equipment was the cause of the fire
In the remaining 10 of the 13 incidences, CalFire found that PG&E’s electrical equipment was an indirect cause of the those fires; meaning, the indirect failure (e.g., tree top breaking-off and falling on a power line, a branch falling on a power line, a whole tree falling on a power line, etc.)
Due to California law and precedence, and according to GAAP rules, PG&E has decided to take a “significant” reserve on 14 of the 21 fires, the amount which would be announced prior to the publication of the 2Q2018 10Q
Eight of the fire investigation results were also forwarded to appropriate county’s attorney general due to perceived violations of state laws
The CPUC and other groups are also conducting independent investigations

Analysis is reserved for our paid subscribers only

Conclusion is reserved for our paid subscribers only

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Auvila Flash PCG (05/29/2018): PCG looks to be on the hook for 2017 CA Wildfires

CalFire issued its report on 4 of the 21 fires that devastated California in October and November 2017
CalFire claims that in 3 of the 4 fires, PCG was negligent and in the 4th that PG&E’s equipment was involved

Other Facts and Figures, Analysis and Conclusions are reserved for our paid subscribers only

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PCG 1Q2018 Earnings (05/03/2018): Potential wildfire costs continue to pressure PCG but upside’s alluring

Wildfires causes PCG to … and 2018 AEPS guidance, and inverse condemnation judgements … management to prudently send … to investors.
Through early 2019, we’d advise …, … once … are known, we feel that PCG presents …, given high … policies, … team, and … regulatory …
For modeling purposes, we assume … then we assume $XXB of equity capital spending … . This still results in NIV of some $XXX/share, which leads us to believe that investors will have … .
PCG expects … some $XXXMM/year in … in 2018 & 2019. Capex plan for 2018 is … $XXB.
For investors, … rate base due to $XXXMM elimination of …, which … rate base growth to XX%-XX% through 2019 vs. XX%-XX% previously
We … our ST-Target xx $XX/share from $XX/share, our NIV xx $/share …

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PCG 4Q2017 Earnings (02/09/2018): At some point PCG presents great buying opportunity, in our view

… PCG to … and 2018 …, and … in the past cause management … to investors
For at least 12-months, we’d advise …, but … are known, we feel that PCG presents …
For modeling purposes, we assume … then we assume $XXB …
This still results in NIV of some $XX/share
PCG expects to issue some $XXXMM/year in … in …
Tax Cut and Jobs Act (TCJA) has … for customers. For investors, … elimination of bonus depreciation, which … through 20XX vs. … previously.
We … our ST-Target xx $XX/share and our NIV … $XXX/share

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2018 Industry Update: Economic growth should favor commodities-driven businesses in 2018

Warmer than normal winter:
Weak gas prices:
However, 4Q2017 and 1Q2018 power gross profit could be …:
Similarly, we’d expect natural gas infrastructure businesses to perform … :
We expect economic growth to surpass …:
Strong economic performance should lead to …:
Commensurately, we expect natural gas infrastructure businesses to perform well:
Adjusted for seasonality, we expect natural gas prices to … and, given normal weather, we’d expect natural gas prices to … for 2018 with an exit price of some …:

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FLASH PCG: PG&E Suspends common and preferred dividends due to wildfires

This afternoon, the board of directors of PG&E Corporation and Pacific Gas and Electric announced the … as of the three month ending …. The decision was made due to the unprecedented …, given that California’s …, regardless of whether or not the … . This means that the utility is … . It is our understanding that … — not necessarily accurate, in our opinion — that the utility would be ….

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PCG: ALJ PD on Diablo Canyon seems a bit capricious, so room for upside

The PD has adjustments to … that PG&E believes are … . The significant differences between … and the … are as follows:

The PD proposes that replacement power for … should be handled through the … instead of separately through …:

Analysis is reserved for our paid subscribers only.

Conclusion is reserved for our paid subscribers only.

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PCG 3Q2017: After great quarter is PCG bad luck or have bad karma or bad mgmt.?

Given 9-months’ of strong results, PCG should’ve bumped-up guidance and celebrated. Then BAMO! Wildfires! We wonder why PCG goes through these periodic tragedies. So, is it bad luck or bad karma? We don’t know, but certainly the market has spoken.
Now it seems PCG’s going to be mired in wildfire controversy for …, which likely means PCG is …, good strategy and good execution, in our opinion
Other than wildfires, PCG marked another uneventful quarter. And, PCG continues to talk-up …, which we agree with
Given wildfires, … that it has … starting 2018
We continue to be intrigued with PCG’s … projects with …

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PCG 2015 GT&S Preliminary Decision

PCG: 2015 GT&S Rate Case: Ouch! ||

On May 5, 2016, the proposed decision and the alternate proposed decision, which is substantively similar to the proposed decision, were issued in the 2015 Gas Transmission and Storage rate case by the California PUC.

Table 1. 2015 GT&S rate case proposed decision (PD) ($MM)

2015

% Ute Ask

2016

% Ute Ask

Increase

2017

% Ute Ask

Increase

Utility Ask

$1,263

$1,346

+6.57%

$1,488

+10.5%

PD

$1,109

87.8%

$1,183

87.9%

+6.67%

$1,309

88.0%

+10.7%

Ex Parte Penalty

($164)

$0

NA

PD B4 SB

$945

74.8%

$1,183

87.9%

25.2%

$1,309

88.0%

10.7%

SB Related Disallowed Expenses

($158)

$0

$0

SB Related Disallowed Revenue associated w/Capex

$10

($51)

($107)

SB Related Penalty Adj. related to Ex Parte Penalty

$62

$0

$0

NET PD

$859

68.0%

$1,132

84.1%

31.8%

$1,202

80.8%

+6.18%

Source: Company data and Auvila Research Consulting

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