Episode summary
PG&E's CEO on Data Centers, Energy Rates, and the Stock | At Barron's
At Barron's
· · 22 min · Hosts: Andy Serwer · Guests: Patti Poppe
Summary
PG&E’s CEO Patti Poppe argued that data-center and AI demand is becoming a major growth engine for the utility, with 12 gigawatts of new load applications that she said can be priced so they help lower rates for other customers. She said PG&E serves about 16 million people across roughly two-thirds of California, and that revenue growth is being driven by customer growth, capital investment, electrification, manufacturing, and new housing demand.
Poppe emphasized that PG&E has already cut rates five times in the last two years, including a 23% reduction for the most vulnerable customers and 13% for everyone else, while improving reliability by 30%. She framed the company’s wildfire exposure as the key unresolved issue holding back the stock, saying the state legislature still needs to fix the liability construct that keeps investor-owned utilities effectively uninvestable.
She said PG&E has pulled back its 2027 capital plan from $13.4 billion to $11.4 billion while awaiting legislative action, but continues to invest in undergrounding lines, with 2,000 miles buried by the end of 2027 and 5,000 more planned over 10 years. Poppe said the stock trades at a 56% discount to the utility sector average and sees upside if California resolves the liability issue.
Key takeaways
- Poppe said PG&E has 12 gigawatts of new large-load applications, and claims properly priced data-center demand could cut rates by 1% per gigawatt.
- She said PG&E lowered rates five times in two years, including 23% for the most vulnerable customers and 13% for others, by improving operating efficiency.
- Poppe said the unresolved California wildfire liability framework is the single gating issue, and PG&E has launched a strategic review and capital pullback while waiting for legislation.
- She said PG&E’s 2027 capital plan was cut from $13.4 billion to $11.4 billion because it cannot borrow at the lowest cost while subinvestment grade.
- Poppe said PG&E stock trades at a 56% discount to the utility sector average and would rerate sharply if the liability issue is fixed.
Notable quotes
“we have 12 gigawatts of uh applications for new load. And the good news is they're willing to pay the right price”
“we have lowered rates five times in the last two years. Lowered our most vulnerable customers rates by 23% in the last two years, 13% for everybody else”
“For every gigawatt of new large demand priced properly, we can reduce rates by 1%”
“There's no scenario where the state can continue to have investorowned utilities uninvestable”
“we had a $13.4 billion capital plan for 2027. We've pulled that back to 11.4 billion”
How the episode opens
Hello everyone and welcome to At Barren. I'm Andy Ser and welcome to our guest Patty Poppy, CEO of PG&E. Patty, great to see you. Thanks for joining us. — Thank you Andy. Great to be with you. — So data centers, AI must really be driving your business. People don't think about data centers in California, but I know you do have a lot of them. What's going on with demand right now?
Yeah, we have data centers and we have data center demand. We power the tech industry for goodness sake. All of uh the tech industry, the big and the small companies we are privileged to serve. And so we have 12 gigawatts of uh applications for new load. And the good news is they're willing to pay the right price so it can lower rates for everybody else.
Why don't we take a step back and give us sort of a thumbnail sketch of the company? I mean people have heard of PG&E and we'll get into some of the issues later but just what is the purview?
Yeah, PG& um is a natural gas and electric company for about twothirds of California. 40 million people in California we serve about 16 million of them from I like to say Bernie to Bakersfield. For those non-Californians that's about Oregon to uh Santa Barbara.
And you're seeing some topline growth this year as opposed to some of the previous years. We were sort of stuck at 24 billion I think and now you're you're starting to creep up. Is that from that demand that we were just talking about?
Our our earnings growth is driven by — This is topline. — Yeah. Okay. So our revenue growth is driven by certainly demand but it's driven by all of uh our customer growth and and by our investment.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- data centers
- energy rates
- stock performance
- utility regulation
Companies and tickers mentioned
- PCG
- PG&E
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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