3. PG&E Corporation (NYSE:PCG)
Forward P/E as on March 4: ~10.8x
Number of Hedge Fund Holders: 74
PG&E Corporation (NYSE:PCG) is engaged in the sale and delivery of electricity and natural gas to customers. The company has been working to serve ~5.5 gigawatts (GW) of new data center energy demand over the next decade, and 1.4 GW remains in final design and is expected to come online between 2026 and 2030. Just to provide a brief perspective, 1 GW is enough power to serve the demand of ~750,000 homes at once. PG&E Corporation (NYSE:PCG) further added that new data center load projected to come online over the upcoming 5 years consists of 740 megawatts that the company evaluated through its original cluster study in 2024.
Notably, new energy demand from data centers enables the company to utilize more of its existing power infrastructure. PG&E Corporation (NYSE:PCG) has also signed a $15 billion loan guarantee agreement with the U.S. Department of Energy’s Loan Programs Office in a bid to fund the grid modernization projects and potentially save customers up to $1 billion on a NPV basis through lower-cost financing. PG&E Corporation (NYSE:PCG) reaffirmed 2025 GAAP earnings guidance in the range of $1.30 – $1.36 per share.
Third Point Management, a New York-based investment advisor, released its Q4 2024 investor letter. Here is what the fund said:
“We are devastated by the recent events in Southern California. Several of our family members and team members call Los Angeles home, and our hearts are with all impacted by the fires.
While PG&E Corporation (NYSE:PCG) does not operate in this region, there is press speculation that one of the fires, Eaton, may have been related to transmission equipment owned by SoCal Edison (SCE), another investor-owned utility (parent company Edison International.) Edison has stated publicly that they do not believe their equipment was involved. The investigation is ongoing, and we believe it is premature to make conclusions about the origin of the fire…
If the Eaton fire ignition was related to SCE equipment, the California legal standard of “inverse condemnation” exposes SCE to resultant property damage liabilities. After PG&E’s bankruptcy in 2019, California passed a bill called AB1054 which protects the state’s investor-owned utilities (Edison, PG&E and Sempra) from these liabilities as long as they adhere to a rigorous safety standard. This includes a comprehensive wildfire mitigation plan approved annually by the government and a commitment to spend billions to harden the grid; for example, PG&E is spending a whopping $18 billion on wildfire mitigation from 2023 -2025. In exchange, AB1054 includes several protections, such as a legal prudency standard that entitles the utility to cost recovery via multiple avenues in the event of a catastrophic fire and a $21 billion insurance fund to cover incurred liabilities. SCE has an active safety certificate and thus should benefit from the protections under AB 1054, just as PG&E would in case of a future fire. Regulator-approved cost recovery is a routine proceeding for utilities in areas prone to severe climate events (hurricanes, tornadoes, earthquakes, etc.) in acknowledgement of the fact that it is not feasible to remove all risk from overhead grid infrastructure. PCG has been the preeminent advocate in California for undergrounding, which we believe is the only way to permanently eliminate wildfire risk from grid assets…” (Click here to read the full text)