PG&E, Edison stocks rise in Q4'20 as California securitizes COVID-19 costs

As the fourth quarter of 2020 drew to a close, the electric and multi-utility stocks covered by S&P Global Market Intelligence extended modest gains from the third quarter, trailing the broader market rally during the period.

The S&P 500 Utilities Index rose 5.7%, the S&P 500 Electric Utilities Sub Index gained 8.1% and the Dow Jones Utility Index climbed 6.1%. The SNL Energy Index saw an increase of 11.8%.

Meanwhile, the S&P 500 saw a total return of 12.1%.

Top-performing stocks

PG&E Corp. and Edison International emerged as the two top-performing stocks among utilities in the last quarter of 2020.

At the start of the fourth quarter, the two companies logged gains after California Gov. Gavin Newsom signed into law a bill that enables the state's utilities to securitize costs incurred during the coronavirus pandemic in an effort to stabilize rates and smooth rate increases over a longer period of time.

PG&E Corp. clinched the top spot after recording a 32.7% share price increase during the quarter.

Investors signaled their approval of Patricia Poppe's appointment as CEO of PG&E Corp. and as a board member of the holding company and utility, fueling an 8% jump in the company's stock price following the announcement.

Edison International logged a total return of 23.6%. Its subsidiary Southern California Edison Co. is deploying the new electric version of Daimler Trucks North America LLC's best-selling class 8 Freightliner truck in a three-month test run, marking an early milestone in the two companies' electrification strategies.

NRG Energy Inc. recorded a 22.2% share price gain over the third quarter of 2020. During the fourth quarter, the company received antitrust clearance and priced concurrent offerings amounting to $3.83 billion to fund its $3.63 billion purchase of Direct Energy LP from Centrica PLC. The deal closed Jan. 5.

Portland General Electric Co., which saw its share price increase 20.5% as of the close of the 2020 fourth quarter, pledged to achieve net-zero greenhouse gas emissions by 2040 and to cut emissions by 80% by 2030.

An independent review conducted by a special committee of the board of directors found that PGE's energy trading activity was "ill-conceived" and led to losses the company incurred in the third quarter. Following the loss, PGE management has made management changes, brought in an outside expert and beefed up staffing to make sure a power trading loss the utility experienced in the third quarter never happens again.

Other utilities that saw double-digit share price increases during the quarter were Idacorp Inc., NorthWestern Corp., ALLETE Inc., Exelon Corp., Otter Tail Corp. and Avista Corp.

Bottom-performing stocks

Avangrid Inc. racked up the biggest loss in the last quarter of 2020, with a negative return of 9.9%.

On Oct. 21, 2020, Avangrid Inc. agreed to acquire PNM Resources Inc. in a $4.32 billion cash deal. Avangrid believes that its strong balance sheet and renewables track record will help PNM Resources realize its clean energy ambitions if they successfully merge.

Consolidated Edison Inc. saw a share price decline of 7.1% in the fourth quarter. S&P Global Ratings lowered its outlook on the company and its subsidiaries to negative from stable, citing potential political challenges that could affect the regulatory environment in New York.

Con Edison subsidiaries Consolidated Edison Co. of New York Inc. and Orange and Rockland Utilities Inc. are facing potential penalties and certificate revocation for apparent failures to properly prepare for and respond to Tropical Storm Isaias, according to the New York governor's office.

Dominion Energy Inc. recorded a negative return of 4.7%.

Its subsidiary Dominion Energy South Carolina Inc. formalized an agreement with SCANA Corp. to settle an SEC civil fraud complaint tied to the abandoned V.C. Summer nuclear project in Fairfield County, S.C.

Xcel Energy Inc. saw its stock price drop 3.4% in the fourth quarter. An administrative law judge in Colorado denied Xcel Energy subsidiary Public Service Co. of Colorado's request to recover investments in its infrastructure tied to an advanced grid intelligence and security initiative.

Other bottom-performing stocks during the period also included WEC Energy Group Inc., Ameren Corp., CMS Energy Corp. and Alliant Energy Corp.

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