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PG&E: Judge’s Proposal Could Cost Utility $150 Billion

January 24, 2019

Pacific Gas & Electric (PG&E) on Jan. 23 said a federal judge’s proposal that the utility mitigate fire danger in its service territory by trimming trees, along with inspecting and repairing thousands of miles of power lines, could cost the company as much as $ 150 billion this year.

William Alsup, a judge in the U.S. District Court for Northern California, earlier this month said he could order PG&E to remove or trim all trees that could threaten the utility’s equipment and possibly lead to wildfires. The judge said the work would need to be done by June 21.

The California Public Utilities Commission (CPUC), which regulates the state’s utilities, is expected to express its opinion of Alsup’s proposal by Jan. 25. A hearing on the proposal is scheduled for Jan. 30 in San Francisco, the day after PG&E is expected to file for bankruptcy.

Alsup is supervising PG&E’s probation term that began in 2017 after PG&E was convicted of felony charges stemming from a 2010 natural gas pipeline explosion in San Bruno, Calif.,…

Despite Financial Hurdles, Utility Capital Spending to Remain Elevated

December 31, 2018

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Despite higher taxable income and pressure on balance sheets, capital spending by regulated utilities will remain elevated—and much of it will be dedicated to replacing aging infrastructure, hardening or efficiency-boosting measures, and on renewables and environmental projects, said Moody’s Investors Service in a recent sectoral briefing.

The credit ratings agency for the first time this June downgraded the regulated utility sector from stable to negative, pointing to a surge in financial risks as more individual companies funnel funds to debt. In a Dec. 14 briefing, Moody’s said utilities will claim less in depreciation expenses and have higher taxable income under the 2017 Tax Cuts and Jobs Act, and most are starting to pay cash taxes as early as 2019 or 2020.

However, several utilities are still involved in extensive improvement projects, it said, warning: “This could put pressure on balance sheets depending on how much debt is used in the financing plans.”

An Unexpected Surge in Captial Spending

Capital spending for a group of 31 utility holding companies that the agency examined was expected surge to $ 100 billion in 2018, compared to $ 90 billion in 2017, Moody’s noted.…

Increasingly Debt-Laden, Regulated Utility Sector Outlook Veers from ‘Stable’ to ‘Negative’

June 21, 2018

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For the first time since it began conducting sector outlooks, Moody’s Investors Service has downgraded the regulated utility sector from stable to negative. The new outlook reflects a surge in financial risks in the sector as more individual companies in the regulated space funnel funds to debt.

Using an analysis of 42 of the largest U.S. utility and power holding companies and 102 utility operating companies with at least 10 years of financial data, Moody’s concluded in a June 18 report that the outlook clearly points to a “declining financial trend” in the sector. The trend is a function of “higher holding company debt levels incurred in the last few years” as a result of lower cash flows, and “a lower deferred tax contribution to cash flow going forward due to tax reform.”

The credit rating agency’s downgrade is mostly rooted in “degradation” of key financial credit ratios. These include the ratio of cash flow from operations to debt; funds from operations (FFO) to debt and retained cash flow to debt; as well as certain book leverage ratios.…

Utility Reaches Settlement in Emissions Lawsuit

April 19, 2018

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The Colorado Springs City Council, which also serves as the board for community-owned Colorado Springs Utilities (CSU), approved the settlement of a lawsuit brought against the city’s downtown coal-fired Martin Drake Power Plant, an agreement that in part promises CSU will look at options for 100% of its power to come from renewable sources as early as 2030.

The city council—in executive session and without a public vote—approved a $ 425,000 settlement with New Mexico-based environmental group WildEarth Guardians. The group had said thousands of violations of the federal Clean Air Act had occurred at Martin Drake. The settlement was filed April 17 in U.S. District Court in Denver, Colorado.

Amy Trinidad, a spokeswoman for the utility, told the Colorado Springs Gazette that CSU denied the allegations in the lawsuit but was still willing to reach a settlement. A bench trial on the suit was originally scheduled to begin in early April, but attorneys in the case informed the court negotiations were underway toward an out-of-court resolution.…

Utility Managers Build Business Case for Digital Technologies

March 22, 2018

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The rise of digital technologies for power plants has moved in fits and starts over the past several years, with some generators quickly embracing digitization of their assets while others are looking to justify potential investments.

Suppliers of digital technologies have widely marketed the benefits, but many generators are looking to current end users for information about what the implementation of digitization means for their plants. Presenters at POWER magazine’s ELECTRIC POWER Conference + Exhibition on March 22 talked about the benefits—and some of the challenges—they’ve experienced with digitization at their facilities, in a session titled “Building a Business Case for Digital Technologies.”

Phillip Yakimow, manager and principal engineer for performance monitoring for Xcel Energy; Michael Reid, general manager for technical programs for Duke Energy; Crystal Bettinger, supervisor of predictive maintenance at Westar Energy’s Jeffrey Energy Center in Kansas; and Brian Wolf, lead performance and optimization consultant for Black & Veatch, presented case studies outlining how digitization has worked at their plants.…

Texas Utility Ready to Ramp Up Renewables

March 14, 2018

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The CEO of Texas-based CPS Energy said March 6 that the utility wants to generate at least 50% of its power from renewable sources by 2040, part of a plan that includes the addition of 550 MW of battery storage, as it looks to reduce its dependence on fossil fuels. But the city-owned San Antonio utility will continue to operate coal and natural gas-fired power plants, though the city’s mayor has said he would oppose building more fossil fuel-powered units.

CPS CEO Paula Gold-Williams outlined the company’s “flexible path” strategy in a meeting with the utility’s board of directors on Tuesday. The utility last year announced it would close its two coal-fired units at the 840-MW Deely station (Figure 1) in San Antonio, one of several Texas coal plants being retired this year, though it will continue to operate two natural gas-fired units—the Sommers Gas Plant—at the site, with generation capacity of 892 MW.

1. Closing in 2018. The Deely power plant near San Antonio will be closed in 2018.

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