Thread by @alfred_twu

Now that lots of Californians are calling for a public takeover of PG&E, as the public, let's do what any investor would do before buying a company - review its financial statements. investor.pgecorp.com/financials/ann… Thread 1/

First, how much would it cost? The market currently values PG&E at $4.12 billion dollars. For comparison, that's two Transbay Terminals, or about 3,000 homes in San Francisco. For comparison, the Salesforce Tower is valued at 1.3 billion. 2/

Part of the reason PG&E is valued so low - around 10% of its 2017 value - is that in 2018 it lost more money per year than Uber and WeWork combined, due to over $11 billion in wildfire-related claims. 3/

Before the fires, PG&E had been making a profit of around $1.5 billion/year out of revenue of around $17 billion/year. About 3/4 of revenue is from electricity and 1/4 from natural gas. The 2018 wildfire claims alone were equal to 8 years of profit, and there's more to come. 4/

PG&E's balance sheet includes another $14 billion in wildfire claims. This is from the Paradise fire and others. 5/

What's on the other side of PG&E's balance sheet? There's $59 billion worth of property, plant, and equipment. Similar to revenue, 3/4 is in electric, and 1/4 in gas. 6/

While most of us think of PG&E as where we get electricity and gas, they're mostly in the delivery business. While they do own some power plants, much of the electricity is generated by power plants owned by other companies, and the gas is purchased from other companies. 7/

Want to collectively own 18,000 miles of high voltage transmission lines (pictured in red on the map) plus 107,000 miles of local distribution lines? That's part of the package if we were to nationalize PG&E
ww2.energy.ca.gov/maps/infrastru… 8/

PG&E also comes with 6,400 miles of natural gas transmission pipeline and 43,100 miles of distribution pipeline. That's enough to wrap around the world twice. ww2.energy.ca.gov/maps/infrastru… 9/

The PG&E gas division also comes with 3 storage fields and a 25% stake in a 4th. At these facilities, gas is pumped into porous underground rock formations for storage. primis.phmsa.dot.gov/rd/mtgs/111616… 10/

PG&E also owns 7.7 gigawatts worth of power plants, about 1/10 of California's total. ww2.energy.ca.gov/almanac/electr… Most of this is from the Diablo Canyon nuclear power plant (2.2 GW), various hydroelectric and pumped storage plants (3.9 GW), three natural gas power plants (1.2 GW) 11/

The Diablo Canyon nuclear power plant, located on the coast near San Luis Obispo, is scheduled to close in 5 years. Decommissioning is estimated to take another 15-45 years. en.wikipedia.org/wiki/Diablo_Ca… 12/

PG&E also owns a lot of real estate, notably its downtown San Francisco headquarters, which takes up an entire block, valued at $1 billion. sf.curbed.com/2019/1/18/1818… 13/

In summary there's plenty of valuable stuff in PG&E, plenty of aging critical infrastructure, and also some huge liabilities. San Francisco wants to buy the part of PG&E's electric distribution grid within SF for $2.5 billion. kqed.org/news/11773007/… 14/

Sacramento did something similar in the 1940s, buying the PG&E distribution grid in Sacramento to create SMUD, a public utility. smud.org/en/Corporate/A… 15/

Distribution grids, which are lower voltage and usually located in cities and along roads, are easier to maintain and have lower fire risk. Long distance transmission lines are a whole different story - it was a transmission line that started the fire that burned Paradise 16/

As a result, a piecemeal selling off of PG&E's power grid is likely leave behind expensive to maintain rural lines that cover great distances but few customers. If the cost to maintain had to be paid only by rural customers, bills would be huge. 17/

That's why if the state were to buy PG&E it would likely buy the entire electric division, so that everyone would still have reasonably priced electricity. Now, the gas division is another issue, now that cities are phasing out natural gas. 18/

Berkeley was the first city to ban natural gas in new buildings, passing a law earlier this year. Now, San Francisco and other cities are also thinking of following. It's to reduce fossil fuel use and to increase earthquake safety. kqed.org/science/194565… 19/

Remember that the natural gas side of PG&E is only 1/4 of the company, and it's also had its disasters, such as the San Bruno explosion. en.wikipedia.org/wiki/San_Bruno… With demand being phased out over the next couple decades, getting funding to invest in pipelines will be hard. 20/

Anyway, a lot to think about. It's not every day that you and 40 million friends need to shop for a fixer-upper utility company. Buying PG&E will be cheap. Owning it won't be. Are we ready for higher bills or electric district bond measures? 21/