PG&E Requests to Sell Minority Interest in New Subsidiary to Hold Non-Nuclear Generation Assets, Proceeds Invested into PG&E System
OAKLAND, Calif. — Pacific Gas and Electric Company (PG&E) has formed a subsidiary company, Pacific Generation LLC, to own its non-nuclear power generation assets. PG&E seeks to transfer its non-nuclear generation assets into the subsidiary company and then sell a minority stake in Pacific Generation which would provide an efficient source of equity financing to help PG&E fund wildfire risk mitigation and clean energy investments.
The proposed transaction would have no impact on PG&E customer bills.
“The creation and minority sale of Pacific Generation LLC represent the best path forward for raising equity capital while balancing a variety of important objectives, including meeting PG&E’s near-term capital needs and continuing to provide safe, reliable, and affordable service,” said Chris Foster, PG&E Corporation’s executive vice president and chief financial officer.
“This transaction would help PG&E to make investments to improve the safety and reliability of our energy grid and help the state achieve its decarbonization and electrification goals despite increasing challenges posed by climate change.”
Today, PG&E submitted a proposal with the California Public Utilities Commission (CPUC) requesting regulatory approval to transfer assets to the subsidiary. If approved, PG&E would transfer substantially all of its non-nuclear generation assets to Pacific Generation LLC, to facilitate a sale of up to 49.9% of equity interests in Pacific Generation to one or more third-party investors.
PG&E would maintain control and majority ownership of Pacific Generation LLC and would use proceeds from the transaction to fund PG&E’s capital investment plans such as wildfire mitigation work, safety and reliability projects, and clean energy investments.
Through Pacific Generation LLC’s engagement of PG&E as operator, PG&E employees — many of whom have decades of experience — will continue to operate and maintain the assets, as well as dispatch and schedule the generation output as part of an integrated resource portfolio just as they do today.
PG&E expects no changes in the number of employees dedicated to power generation work associated with the creation and minority sale of Pacific Generation LLC.
Subject to the CPUC’s approval, the subsidiary Pacific Generation LLC would operate as a regulated cost-of-service public utility under the CPUC’s jurisdiction, continue to dedicate its output to public service, and provide generation service to customers within the same electric service territory as PG&E. PG&E’s hydroelectric generation facilities will continue to be operated in accordance with licenses issued by the FERC.
Pacific Generation LLC would own what are currently PG&E’s non-nuclear generating assets. The rate base of the assets proposed to be transferred is approximately $3.5 billion, which is about 7% of PG&E’s total rate base. This includes PG&E’s fleet of 62 hydroelectric powerhouses and associated dams and reservoirs, utility-owned solar power plants, the 182.5 MW Elkhorn Battery Storage Facility in Monterey County, and three natural gas-fired generating stations.
Customers will continue to receive safe and reliable energy from these generating plants, and recreational facilities at the hydroelectric reservoirs will remain open and available for public use.
This PG&E Currents story contains forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E, including but not limited to the potential sale of a minority ownership stake in a subsidiary owning PG&E’s non-nuclear generation assets, as well as the financial impacts and the timing for CPUC review of PG&E’s application for the potential sale. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in PG&E Corporation’s and PG&E’s joint annual report on Form 10-K for the year ended December 31, 2021, their most recent quarterly report on Form 10-Q for the quarter ended June 30, 2022, and other reports filed with the SEC, which are available on PG&E Corporation's website at www.pgecorp.com and on the Securities and Exchange Commission website at www.sec.gov. PG&E Corporation and PG&E undertake no obligation to publicly update or revise any forward-looking s presentation contains forward-looking statements that are not historical facts, including statements about statements, whether due to new information, future events or otherwise, except to the extent required by law.
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