PG & E CorporationPCG

Morningstar Rating

Stock Research and Analysis

by Travis Miller

Since emerging from bankruptcy in 2004, we believe PG&E has among the best long-term prospects of any regulated utility in the United States. Constructive California regulation following the 2000-01 state energy crisis has led to generous rates Read more

Bulls Say

PG&E operates in arguably the most favorable regulatory environment in the U.S., which means robust earnings growth opportunities.

Regulators have supported the company's investments in new technologies, such as smart meters and renewable energy.

The state still remembers the 2000-01 energy crisis and probably will protect utilities to prevent a repeat.

PG&E customers and shareholders both could benefit from carbon caps and other green initiatives passed in California. Read more

Bears Say

PG&E depends almost entirely on regulators for approval of its ambitious investment program. A cut in regulated rates could jeopardize earnings growth.

California customer rates that are 60% higher than the national average could hurt PG&E's effort to push through higher rates of return for shareholders.

An overly aggressive capital-expenditure program could damp dividend-growth prospects.

Recently enacted California environmental restrictions could raise power prices to record levels. Read more

Strategy

With regulated returns on capital near 9%, PG&E is investing heavily in California's energy infrastructure. In particular, investments in environmentally friendly power plants and transmission lines Read more

Management

PG&E's bankruptcy experience helped it clean up both its financial performance and its corporate governance. Chairman and CEO Peter Darbee, a former investment banker and CFO who took over as CEO in 2005, went through his first true test negotiating Read more

Profile

PG&E is a holding company whose main subsidiary is Pacific Gas and Electric, a regulated utility operating in Central and Northern California that serves 5.1 million Read more

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