QUOTE AND NEWS
Yahoo  Sep 11  Comment 
If you want to know who really controls PG&E Corporation (NYSE:PCG), then you’ll have to look at the makeup of its share registry. Insiders often own a large chunk ofRead More...
Motley Fool  Sep 6  Comment 
California steps in to save the company, and Wall Street takes notice.
Market Intelligence Center  Sep 6  Comment 
Benzinga  Sep 4  Comment 
The state of California last week passed SB 901, a piece of legislation that includes language that reduced the wildfire liability risk for PG&E Corporation (NYSE: PCG). Wall Street is taking notice, and PG&E stock received a pair of...
Yahoo  Aug 31  Comment 
The company -- which provides electricity and gas to 16 million people -- faces billions of dollars in liabilities from last year’s wildfires, and legislators have until midnight Friday to pass a bill that would cap the amount PG&E must pay. ...
Insurance Journal  Aug 27  Comment 
California lawmakers outlined a proposal to help PG&E Corp. and other utilities cope with billions of dollars of potential damages from deadly wildfires that ravaged the state last year. The plan, part of a broad package addressing the growing...
Wall Street Journal  Aug 24  Comment 
PG&E was identified as the utility that authorities had fined in May for losing control of a database with confidential information about its systems and leaving it exposed on the internet for 70 days.




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PG&E Corp (NYSE: PCG) is an energy holding company whose primary subsidiary is the regulated utility, Pacific Gas and Electric. PG&E operates in 47 of 58 Northern and Central Californian counties and provides electricity and gas to over 9 million customers. As a regulated utility, PG&E has very little competition and a strong customer base. In 2009, it had 5.1 million electricity distribution customers, and 4.3 million natural gas distribution customers. Its business is stable and relatively low-risk because the utility can rely on a consistent customer base who pay rates determined by the state utilities commission.

Ultimately, PG&E’s future is inextricably tied to its relationship with the California Public Utilities Commission (CPUC). The CPUC is responsible for setting most of the regulations that govern PG&E’s business—most importantly the rates it is able to charge customers. In 2000, the CPUC set rates so low PG&E couldn’t turn a profit, which forced them into bankruptcy and contributed to the state-wide energy crisis. Since then, PG&E and the CPUC have had a better relationship, due in part to residual fears of another crisis. However, PG&E has to renegotiate its “rate-case” in 2011, so it is unclear how long the current trend will last.

Company Overview

History

Pacific Gas and Electric (PG&E) was founded in San Francisco in 1905 after the consolidation of more than two dozen power and water companies across California. PG&E began delivering natural gas to northern California in 1930 and after WWII began quickly building new power plants. In the late 1990s, deregulation of the California energy market allowed PG&E to sell most of its natural gas plants. While it continued to operate other types of plants (hydroelectric, nuclear, and a few remaining natural gas), this move forced the utility to buy power from outside energy generators at variable prices while providing energy to consumers at fixed rates. In 2000, energy costs became so high that California was pushed into an energy crisis that including rolling blackouts throughout the state. PG&E was forced to declare bankruptcy in April 2001 when it could no longer sell energy for more than it could buy on the open market. PG&E emerged from bankruptcy in April 2004.

Business Performance and Products

PG&E provides gas and electricity to customers across Northern and Central California. The utility owns power-generation facilities that supply approximately 40% of its annual needs and purchases the rest. These facilities include 118 hydroelectric, nuclear, and fossil-fuel plants in California. During 2009, PG&E had revenues of $13.4 billion, and was able to post a net income of $1.23 billion in 2009.

PG&E supplies electricity to 5.1 million customers and gas to 4.3 million customers.[1] As the dominant utility in the region, PG&E provides electricity to both homes and businesses. The corporate-sales side is particularly complex in Silicon Valley, where IT firms need especially high amounts of energy. PG&E also works with large customers (like Yahoo! (YHOO) and Adobe Systems (ADBE)) to help them design facilities that are energy efficient and keep power use low across their companies. Here is a breakdown of customer profiles for both the gas and electricity businesses:

I think you hit a bullseye there flelas!

Competitors

As a regulated utility company, PG&E has no real competition in the markets it serves. In other parts of California, two other energy concerns provide power: Southern California Edison and San Diego Gas & Electric. Nationwide, PG&E performs well compared to other utilities and is even considered a “bellwether” company in the domestic utility industry because of its especially constructive relationship with the CPUC and the growing California electricity market—since 2003, PG&E has grown twice as fast as the industry as a whole. While not the only company to provide both gas and electricity, PG&E is in the minority as more utilities focus exclusively on electricity.



References

  1. PCG 10-K 2009 Item 1 Pg. 1
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