Picture Is Grim for PG&E Suppliers -- WSJ
25 Março 2019 - 4:02AM
Dow Jones News
By Andrew Scurria
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 25, 2019).
Renewable energy suppliers that depend on PG&E Corp. are
still being paid in full after the California utility's bankruptcy
but aren't likely to climb out of junk territory anytime soon,
S&P Global Ratings analysts said.
Green-energy producers are vulnerable to more potential
downgrades as the impact on their finances from PG&E's
bankruptcy restructuring comes into focus, S&P analysts told
investors on a conference call Friday.
Several power suppliers that rely on PG&E for most or all of
their revenues have already been downgraded, reflecting fears the
utility may use bankruptcy law to cancel or renegotiate billions of
dollars in energy purchase deals.
PG&E hasn't yet signaled which supply agreements it wants to
keep and which to discard. The utility likely "will not make an
immediate decision," meaning years of potential uncertainty for
some projects, said S&P analyst Anne Selting.
But even if PG&E stopped paying, it would take a year or
more for suppliers Panoche Energy Center LLC, Topaz Solar Farms LLC
and Crockett Cogeneration LP to run out of cash and default on a
combined $1.3 billion in debt, she said.
Project owners including NextEra Energy Partners LP, Calpine
Corp. and Clearway Energy Inc. are trying to protect themselves,
arguing that PG&E needs approval from federal regulators to
reject those agreements.
PG&E contends that the Federal Energy Regulatory Commission
has no role to play in the bankruptcy, while the agency itself has
said the contracts can't be rejected without its approval.
Because FERC is charged with maintaining electrical-grid
reliability and encouraging renewable investment, the agency is
less likely to modify the contracts, many of which include prices
from years ago when renewable power was more expensive than it is
today.
PG&E wants FERC excluded from the decision making, saying
the deals should rise and fall on the company's "business judgment"
alone and that involving federal regulators would impede a
successful restructuring.
The judge presiding over PG&E's bankruptcy has pledged to
rule quickly on the issue, though his ruling is sure to be
appealed.
PG&E has been paying its obligations under the contracts in
full since entering bankruptcy protection, according to analyst
Aneesh Prabhu. Yet the chapter 11 also put the deals into default
and caused a cross-default under some project owners' own debt
documents, Mr. Prabhu said.
Lenders can choose to declare their debts immediately due and
payable due to those cross-defaults, but so long as PG&E keeps
paying, lenders "will have no economic incentive to do so," he
said. Mr. Prabhu said some project owners are hammering out
standstill agreements with their creditors that would restrict the
payment of dividends while the bankruptcy unfolds.
Clearway Energy, a renewable energy investment company that owns
1,200 megawatts worth of projects that sell to PG&E, announced
in February it was cutting its shareholder dividend by 40%, saying
that distributions from its projects "could be restricted for an
undetermined amount of time" because of the bankruptcy.
Power suppliers are generally entitled to damages if a buyer
dissolves their deals, but any such claim against PG&E would be
paid at a fraction of its value as an unsecured claim against the
bankruptcy estate. Alternatively, if the deals are enforced,
PG&E could have to pay them off in full, elevating the
suppliers to the top of the payment line.
Write to Andrew Scurria at Andrew.Scurria@wsj.com
(END) Dow Jones Newswires
March 25, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
PG&E (NYSE:PCG)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
PG&E (NYSE:PCG)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024