PG&E Corporation (NYSE:PCG) Q1 2018 Earnings Conference Call Transcript

May 03, 2018 • 12:00 pm ET

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PG&E Corporation (NYSE:PCG) Q1 2018 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instructions) Our first question comes from the line of Stephen Byrd of Morgan Stanley. Please proceed.

Analyst
Stephen Calder Byrd

Hi, good afternoon and good morning.

Executive
Jason P. Wells

Good morning, Steven.

Executive
Geisha J. Williams

Good morning.

Analyst
Stephen Calder Byrd

Geisha, you mentioned in your prepared remarks the need to directly address inverse condemnation. And I think the investor community very much understands the seriousness of that issue. Without speaking for the legislature but just broadly, is that well appreciated at the legislature? Is it your sense that, that's -- it's understood that, that is a very significant issue and needs to be addressed? Is there a broad understanding? Or is there still sort of more education to be done on that?

Executive
Geisha J. Williams

Thanks for the question, Steve. Let me just start by saying what we've been doing. We've been spending a great deal of time educating a lot of the different stakeholders in the state on how truly flawed the application of inverse condemnation is to investor-owned utilities. And I do believe that, that message is resonating and is well understood. And that's why we were so encouraged to see the governor and the bipartisan leaders come out in March announcing their intention to develop comprehensive solutions this year to really address the climate change issues and how they impact California. And of course, we were particularly encouraged to see the liability rules and regulations for utility service actually called out as an area requiring updating.

So we've shared many times with all of you and, of course, all the various stakeholders, inverse condemnation is a risk to the financial health of all the California IOUs and by extension to the state's ability to meet its clean energy goals. So that's why we're so focused on it. It's such an important issue. And I do believe that, that message is resonating and is well understood.

That's helpful. Just on fire insurance and just availability and cost, Jason, I just wanted to check in with you and just hear your latest thoughts on market conditions are actually being able to obtain fire insurance.

Thanks, Stephen. Yeah, just as a quick reminder, our liability insurance period runs from August 1st through July 31st. And so last year, when we renewed, we saw increases in prices but roughly at a level that was nearly three times what we were collecting in rates. And as you can imagine, as we're in the market for renewal this year, we're seeing capacity decline and pricing increase. I don't think it's -- it wouldn't be prudent for me to comment directly on pricing. But I think that general trend of smaller capacity, declining capacity as well as increasing pricing is something that we're going to face with this new upcoming renewal period.

Analyst
Stephen Calder Byrd

Thank you. And if I could, just maybe one last question just on -- I guess I'm thinking about accounting charges for potential fire liabilities. And assuming that we've received the first real data point from CAL FIRE in terms of causation, is simply a report on causation