PG&E CEO sees no credit upgrades until California fire season ends

By Michelle Ma, Bloomberg

While PG&E Corp. was upgraded by one of the major ratings firms last month, California’s biggest utility doesn’t expect others to follow suit until after wildfire season.

There is “definitely still risk ahead” when it comes to wildfires, even with the recent heavy rains that hit the state, PG&E Corp. Chief Executive Officer Patti Poppe said in an interview. “We’re still definitely on watch and on the ready.”

The utility, which serves about 16 million people in its service territory, is waiting to be upgraded to investment grade by Moody’s Ratings and S&P Global Ratings. Fitch Ratings upgraded the company in September.

The company was on the precipice of investment grade right before the Los Angeles fires earlier this year, Poppe said, but the credit graders are now looking to get through wildfire season before making any decisions.

Utilities including PG&E have been hit hard by increased wildfire-related liabilities, as climate change has made wildfires more destructive and widespread. PG&E exited from bankruptcy in 2020 after settling fire-related claims for about $25.5 billion.

In September, the California legislature passed a sweeping package aimed at shoring up the state’s wildfire fund, which was at risk of being depleted following the LA wildfires in January. While PG&E was “pleased” with the legislation, Poppe said there is still more that Governor Gavin Newsom and policymakers can do to reduce wildfire risk in the state. Chief among them would be policies that encourage home hardening such as vegetation management.

“We need to make sure that our housing stock is resilient to wildfire conditions. I do think that’s a homeowner responsibility,” said Poppe. “I don’t think electric ratepayers should be paying for people to harden their homes.”

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