Introduction
PG&E is the largest energy utility in the country, providing electricity and natural gas to about 16 million customers. The company’s success is rooted in its ability to deliver predictable earnings and cash flow for shareholders over time. With a strong regulatory framework, PG&E is able to provide its customers with reliable service at reasonable prices. It also generates billions of dollars in free cash flow every year that it can return to shareholders through dividends and share buybacks.
A power utility company
PG&E is a regulated utility that provides electricity to more than 5 million people in Northern and Central California. PG&E is also a holding company, meaning that it owns other companies. It’s one of the largest corporations in the country, with more than $15 billion in annual revenue. As a Fortune 500 company, PG&E has an enormous impact on its customers’ lives—and many of us have never even heard of it before now!
A generation company
PG&E is a generation company, which means it generates electricity. You can think of this as “selling” energy to customers. Any time you turn on a light switch or charge your phone, you are using energy that PG&E generated and sold to you.
Generation makes up the majority of PG&E’s business—about 80% of their total revenue comes from selling power they make at power plants using fossil fuels like coal and natural gas (as well as renewable forms such as hydroelectricity).
A transmission company
A transmission company transports energy over long distances, from where it’s produced to where it will be used. PG&E is the largest such company in the United States and, as of 2017, the largest in the world.
A distribution company
Distribution companies are responsible for delivering electricity to customers. This includes maintaining their wires, poles, transformers and meters. The government regulates distribution companies to ensure that they provide safe, reliable service at affordable prices.
PG&E is the largest electric distribution company in the US, serving more than 16 million customers in northern and central California. As you can see on the map below (which shows how PG&E operates across California), there isn’t another distribution company operating in California:
A holding company
PG&E is a holding company. That means it keeps the ownership of its subsidiaries and doesn’t operate them directly.
The advantage for PG&E is that it has flexibility in making decisions about which utilities to operate and when to sell or spin off assets. The disadvantage is that it can have less control over each subsidiary’s performance because they aren’t under the same roof as PG&E.
Dividend power
As a regulated utility, PG&E pays a dividend. This is tied to its stock price, so it’s not guaranteed. But for long-term investors who want income from their portfolio and are willing to put up with some risk, it’s a nice option.
PG&E is also one of the best dividend stocks on the market—and for good reason: The company has paid out increases in every quarter since 2012, including during periods where other utilities were cutting or suspending payments altogether due to weakened financial conditions.
That said, while this makes PG&E an attractive option for conservative investors looking for consistent income over time (even if their investment drops), it also means that shareholders may have experienced significant losses over the last few years as the stock price has fallen significantly since peaking in 2017 and 2018 (after several years of strong growth).
Strong, long-term fundamentals
PG&E is a regulated utility. Regulated utilities are subject to what’s called a rate base, which is the value of the company’s assets. The rate base includes property, plant and equipment that generates electric or gas service for customers. The rate base also includes intangible assets like software and licenses related to generation or distribution of energy in California.
The cost of PG&E’s assets is reviewed every three to five years by the CPUC (California Public Utilities Commission) when they set rates for the next three-to-five year period. If a new technology comes along that reduces costs and improves efficiency at an existing facility, PG&E can file for an adjustment with regulators based on those changes—but only if they’re approved by both parties involved in negotiations over costs: PG&E as well as its customers who pay bills every month through increased charges on their bills due over time periods ranging from months/years into decades ahead
Stable revenue and cash flow from regulated business
PG&E is a regulated utility, which means it supplies electricity and natural gas to customers throughout California under a legal framework known as the “Public Utilities Regulatory Policies Act of 1978” (PURPA). As the largest energy utility in the country, PG&E provides service to approximately 4.4 million electric customers and 2.9 million natural gas customers.
PG&E is also a holding company that owns three subsidiary affiliates — Pacific Gas and Electric Company (PG&E), Pacific Power & Light Company (PPLC) and Calpine Corporation (CPN). Each of these companies serves distinct functions within the overall organization:
Strong financial position and cash generation capability
The PG&E Business Model has a strong financial position and cash generation capability. The company has a strong balance sheet, with cash and equivalents of $3.5 billion in 2014. PG&E’s operating results have been very consistent since 2009, resulting in a positive free cash flow (FCF) trend year over year since 2010. PG&E’s FCF is expected to remain strong going forward.
Strong investment quality ratings
PG&E has an investment-grade credit rating from all three major credit rating agencies, including Standard & Poor’s, Moody’s and Fitch. PG&E’s credit ratings have remained stable during the past several years and are a reflection of the company’s strong financial position, as well as its consistently high operating performance.
PG&E is the largest energy utility in the country,
PG&E is the largest energy utility in the country, serving almost 16 million people in Northern and Central California. It also operates in Nevada, Hawaii and New York.
- PG&E is a public utility company.
- PG&E is a holding company.
- PG&E is a power utility company that provides electricity to homes across California and has over 80,000 miles of high-voltage transmission lines that connect cities across the western United States. They’re also one of two electric distribution companies for customers who live outside major metros like San Francisco or Los Angeles—serving over 5 million people through approximately 15,000 miles of primary distribution lines.* The other electric distributor serving nonmetro customers is Southern California Edison (SCE). These two companies oversee most residential bills through this process:
Conclusion
PG&E is a great company. It has strong fundamentals and pays a healthy dividend. It also has the ability to buy back stock at a reasonable price because it’s so cheap. If you’re looking for stability with your investments, then this might be one worth checking out further!
