Embattled California power giant Pacific Gas & Electric could be a “big beneficiary” of the roughly $1 trillion infrastructure bill passed by Congress on Friday, given the legislation’s focus on bolstering the nation’s power grid, according to a new report.
The bill, a pared down version of President Biden’s initial infrastructure plan, allocates roughly $25 billion to power transmission and distribution, with a focus on “building out new capacity and increasing reliability,” wrote a CreditSights team led by Andrew DeVries, co-head of U.S. investment-grade credit, in a Monday report.
“One provision we are surprised has not been discussed more is the $5 billion provision for preventing outages and enhancing the resilience of the electric grid to ‘disruptive events’ defined as an event in which operations of the electric grid are disrupted, preventively shut off, or cannot operate safely due to extreme weather, wildfire, or a natural disaster.”
PG&E Corp,
PCG,
California’s largest electricity provider, was tipped into bankruptcy in 2019 for the second time in about two decades, after its equipment started the 2018 Camp Fire that destroyed the town of Paradise, as well as other mega fires.
Last year, the utility emerged from Chapter 11 in the unusual position of having more debt than it had before, while struggling to pay out claims to its near $13.5 billion fire victims fund. The fund was created as part of plan to exit bankruptcy.
Read: The hedge funds that left wildfire victims holding the bag on PG&E stock
PG&E outlined plans in July to bury 10,000 miles of its power lines in high-wildfire threat areas in the next several years. But more recently, its equipment also is suspected of having a role in starting this year’s massive Dixie Fire, the second-largest on record in the state.
Shares of PG&E were off 0.7% Monday, while it 3.5% coupon BBB- corporate bonds due in August 2050 also were under modest selling pressure, according to BondCliq data. The Dow Jones Industrial Average
DJIA,
the S&P 500
SPX,
and Nasdaq Composite Index
COMP,
were pushing deeper into record territory.
A PG&E spokesman said the utility applauds the passage of the legislation, including its proposed appropriation of $5 billion through 2026 for extreme weather-related grid resilience improvements, in a statement to MarketWatch. The statement also pointed to the bill’s ability to “reduce customer costs for investments around undergrounding, grid hardening, microgrid implementation, fuel reduction and other critical wildfire mitigation measures.”
The approved infrastructure bill also includes some $7.5 billion to help build out a network of electric-vehicle charging stations and other EV charging-related initiatives. Shares of electric-vehicle charging companies, including ChargePoint Holdings Inc.,
CHPT,
soared Monday, as did those of EVgo Inc.
EVGO,
and Volta Inc.
VLTA,
Read: 5 infrastructure stocks to buy now that Biden’s bill has been passed, according to Jefferies
This post was originally published on Market Watch
