Pacific Gas and Electric Company ("PG&E"), a subsidiary of PG&E Corporation ([stock]PCG[/stock]), has requested Nuclear Regulatory Commission (NRC) to delay the final action on the ongoing license renewal application for the Diablo Canyon Nuclear Power Plant as it plans to speed up the completion of advanced 3-D seismic studies related to the plant. The twin reactors in the nuclear plant have permit to operate till 2024 and 2025, respectively.
The subsidiary is in the process of working even more closely with various governmental permitting agencies to accelerate the plant’s advanced seismic research as customers and government partners are concerned about the seismic characteristics surrounding the plant particularly after the Japan earthquake and the resulting tsunami.
Pacific Gas is the only utility in the country that employs a seismic department. Acknowledging the public demand for completion of the seismicity study of the plant, the company intends to garner all necessary assurances of its safe running in the earthquake prone Californian region before the NRC license renewal. With a long-term safety vision, the utility also plans to conduct high-energy offshore 3-D studies as soon as it obtains necessary permits from various regulatory agencies.
PG&E Corporation’s supportive regulatory environment in California and forward looking rate cases ensure a steady stream of earnings and returns. Going forward, favorable decisions from regulators, long-term supply contracts, diversification into alternative power sources and infrastructure improvement programs bode well for the company.
These positives, however, will be partially offset by risks, including the present unfavorable macro backdrop, headwinds in the California economy, tepid demand for electricity, risk of penalties related to the San Bruno pipeline explosion and power-price volatility. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
San Francisco, California-based PG&E Corporation is the parent holding company of California’s largest regulated electric and gas utility, PG&E. The Utility generates revenues mainly through the sale and delivery of electricity and natural gas to customers. It engages in the business of electricity and natural gas distribution, electricity generation, procurement, and natural gas procurement, transportation, and storage. The utility also operates hydro-electric, nuclear and fossil-fueled power plants. The company mainly competes with Edison International ([stock]SRE[/stock]).
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