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PG&E crisis risks Calif. climate goals; KMI to spend $3.1B on new projects

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


PG&E crisis risks Calif. climate goals; KMI to spend $3.1B on new projects

Top News

Clean energy risks, potential to transform business model seen in PG&E crisis

As PG&E Corp. and its utility subsidiary Pacific Gas and Electric Co., or PG&E, teeter on the edge of insolvency over mounting wildfire liabilities, clean energy advocates say California's ambitious energy efficiency, renewable energy and overarching climate policy targets are in jeopardy.

PG&E's troubles ripple into gas provider Ruby Pipeline's finances, credit

The looming bankruptcy of California's largest utility is putting financial pressure on a key supply line of gas to the West Coast, with Ruby Pipeline LLC's credit downgraded to junk status by one rating agency and facing similar downgrades by the other two.

Kinder Morgan to spend $3.1B on new projects in 2019

Kinder Morgan Inc. has no plans to diverge from its commitment to boost growth spending and dividends without tapping equity or debt markets in 2019, according to company executives.

Longview raising capital for coal, gas, solar complex at existing W.Va. plant

Longview Power LLC, the company behind one of the newest and most efficient coal-fired power plants in the U.S., is seeking investors to help make the plant part of a diversified energy complex with new solar and natural gas facilities just outside of Morgantown, W.Va.

Quoted

"This is a perfect moment to restructure the utility business model to have a separation between the transmission grid and the distribution grid, and ultimately to force investor-owned utilities to divest [from] transmission grid investments," said Craig Lewis, executive director of the Clean Coalition, a California advocacy group that promotes distributed energy resources, on how PG&E Corp.'s impending bankruptcy presents a chance to transform the structure of California's power sector.

Power

* Fitch Ratings downgraded the $1.1 billion senior secured notes of Warren Buffett's 550-MW Topaz Solar Farm, and the $140.4 million of 5.125% series B trust certificates due 2038 of the 250-MW Genesis Solar Energy Project to C from BBB-.

* S&P Global Ratings downgraded the issuer credit ratings on Pacific Gas & Electric, or PG&E, to D from CC after the utility failed to pay $21.6 million in interest payment on its 5.4% senior notes due Jan. 15, 2040. The rating agency also lowered PG&E's short-term ratings to D from C.

* PG&E Corp.'s potential reorganization under Chapter 11 could result to a "complete dismantling of its system and a takeover by multiple municipalities, Bloomberg News reported.

* Democratic lawmakers during a closely watched Senate confirmation hearing Jan. 16 grilled U.S. Environmental Protection Agency Acting Chief Andrew Wheeler, nominated a week earlier to officially lead the agency, on the Trump administration's deregulatory agenda and his past work as a fossil fuel lobbyist.

* U.S. lawmakers wrote a letter to Energy Secretary Rick Perry voicing concerns over Huawei Technologies Co. Ltd.'s sales of solar equipment in the U.S., saying the equipment "could be hacked" and "threaten the entire American electricity grid, the Financial Times reported.

* The Louisiana Public Service Commission has signed off on the sale of NRG Energy Inc.'s 3,555-MW NRG South Central Generating LLC portfolio to Cleco Corporate Holdings LLC. This was the last approval needed to complete the transaction.

* The General Assembly of Virginia elected former circuit court judge Patricia West as a commissioner of the Virginia State Corporation Commission, The Associated Press reported.

* Connecticut state Rep. Christine Palm proposed a bill that would require public schools in the state to teach climate change, the AP reported.

* Ameresco Inc. completed the acquisition of Massachusetts-based solar services provider Maximum Solar LLC for an undisclosed sum. The deal will help Ameresco expand its operations and maintenance services to owners of commercial-scale photovoltaic solar facilities.

Natural gas

* With a few exceptions, Appalachian shale gas drillers do not look likely to heed investor calls for more spending restraint and capital discipline despite a clobbering in 2018's stock market, according to an S&P Global Market Intelligence analysis.

* Idaho Oil and Gas Conservation Commission Chairman Kevin Dickey has resigned after a potential conflict of interest related to Dickey's recent purchase of about 5,000 shares in Alta Mesa Resources, the AP reported.

* An Exxon Mobil Corp. affiliate exercised an option in January to buy a 20% equity stake in the $2 billion Permian Highway pipeline project led by a Kinder Morgan subsidiary and Blackstone Energy Partners portfolio company EagleClaw Midstream Ventures LLC.

* A group of U.S. House Democrats urged the U.S. Bureau of Ocean Energy Management to "reverse" its decision of bringing 40 workers back to work during the partial government shutdown to perform duties on the administration's offshore gas and oil drilling plan, The Hill reported.

* Kinder Morgan posted fourth-quarter 2018 adjusted EBITDA of $1.96 billion, up from the $1.90 billion the company reported during the same period a year earlier.

Oil

* The U.S. Energy Information Administration offered the first glimpse of its short-term oil price projections for 2020, a year during which it expects oil prices to recover but remain below the levels seen during 2018 despite expected record-level U.S. refinery runs.

* A group of six First Nation communities approached Prime Minister Justin Trudeau's government to potentially acquire the Trans Mountain oil pipeline expansion project, Bloomberg News reported, citing Indian Resource Council CEO Stephen Buffalo.

* Husky Energy Inc.'s proposal to buy out oil sands producer MEG Energy Corp. expired Jan. 16 without meeting the minimum tender condition for the deal, prompting Husky to cancel its C$6.4 billion offer.

* L1 Energy, which is run by former BP PLC chief, could be preparing to launch an initial public offering by early 2020, Bloomberg News reported. The European oil and gas company is backed by Russian oligarch Mikhail Fridman.

* California's San Luis Obispo City Council voted to oppose Exxon Mobil Corp.'s plan to restart its three offshore platforms by sending oil tanker trucks through Santa Barbara, San Luis Obispo and Kern counties, and Plains All American Pipeline LP's plan to build a new coastal oil pipeline, according to the Center for Biological Diversity.

Coal

* A government watchdog group Jan. 15 asked the U.S. Environmental Protection Agency's inspector general to investigate whether Acting Administrator Andrew Wheeler violated an ethics pledge by participating in rulemakings championed by his former lobbying client, Murray Energy Corp.

* The capacity-weighted average age of the U.S. generation fleet was 29 years as of Dec. 21, 2018, unchanged for the fourth year in a row. Gas, solar and wind dominated new capacity added to the grid in 2018, while coal accounted for bulk of the capacity retired for the year.

ChartWatch

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Led by investments in wind farms and solar arrays, clean-energy investment in the United States rose 12% to $64.2 billion in 2018, even as global clean-energy funding declined 8% to $332.1 billion, Bloomberg NEF said in a new report.

New from RRA

* While the books closed on 2018 with relatively mild December 2018 weather, degree days quantified for the quarter indicate that the winter of 2018-2019 is off to a chillier start than a year ago. This should be a plus for many utilities, who will be reporting profits in coming weeks.

The day ahead

* Early morning futures indicators pointed to a lower opening for the U.S. equity markets. To view more SNL equity market indexes, click here. To view more SNL Energy commodities prices, click here.

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Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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