Clearway Haunted by Ongoing PG&E Uncertainty, Regardless of Favorable Q3

Clearway Haunted by Ongoing PG&E Uncertainty, Regardless of Favorable Q3

Clearway Power on Wednesday reported web earnings at $35 million for the third quarter of 2019, swinging away from losses within the first two quarters of the 12 months however highlighting continued challenges related to the chapter of California utility Pacific Gasoline & Electrical.

All informed, Clearway has $1.2 billion in tasks impacted by the chapter. On a Wednesday earnings name, CFO Chad Plotkin mentioned the corporate’s impacted tasks have amassed $46 million in 2019 that’s restricted from distribution. The PG&E state of affairs has put “important constraints” on Clearway’s capacity to deploy capital, in line with CEO Chris Sotos. 

“We’re working to keep up our steadiness sheet flexibility as PG&E continues in direction of this emergence from chapter,” mentioned Sotos. “The contracts impacted by PG&E proceed to carry out. Our tasks haven’t been impacted by the current wildfires and we proceed to imagine that the emergence of PG&E from chapter in June of subsequent 12 months is possible.” 

The most recent outcomes come after the corporate twice lowered monetary steerage in 2019, which it maintained at $250 million in Q3. The corporate additionally issued 2020 full 12 months steerage at $295 million, which incorporates $99 million in contributions from PG&E tasks.

If PG&E exits chapter in June as deliberate, the “overwhelming majority” of yet-to-be-distributed cash can be launched in six to 9 months, Sotos mentioned Wednesday.

Clearway, a big proprietor of renewables, has factored that uncertainty into its assumptions, however PG&E’s dedication to renewables contracts has remained a shifting goal over the past a number of months. To hedge in opposition to the uncertainty, Clearway has labored over the past a number of quarters on forbearance agreements for its PG&E tasks.

In Q3, Clearway reported progress on that entrance, reaching an settlement on its 250-megawatt CVSR photo voltaic venture and the repurchase of debt — which Clearway mentioned would scale back credit score publicity for lenders — for the 46-megawatt Agua Caliente photo voltaic set up the place it holds a 16 p.c share. 

Regardless of these favorable outcomes, the corporate continues to carry dividends at $zero.20 per share. 

“Till [Clearway] obtains extra visibility across the PG&E chapter and has full entry to its venture distributions, dividends paid to shareholders ought to be aligned with the accessible company liquidity at our goal payout ratio,” mentioned Sotos on the decision.

Renewables builders have gotten some readability on PG&E contracts this quarter, with PG&E pledging to make good on these offers in its September chapter plan (although bondholders now even have a shot at creating their very own plan). However what’s going to turn out to be of the utility continues to be an open query in California, with requires PG&E to turn out to be a customer-owned cooperative or hand the grid over to native management. 

Notably, on Wednesday Clearway mentioned the tie-up of six renewables tasks would encourage it to pursue progress in its thermal arm, which gives gas cell and mixed warmth and energy tasks, and is separate from its “typical era” portfolio. Thermal era raked in $5 million in Q3 earnings with Clearway inking a 15-year power companies take care of a resort in Puerto Rico. 

Although the corporate mentioned it is proud of its present pipeline, it additionally hinted at potential wind and photo voltaic acquisitions and mentioned it was particularly nosing round new photo voltaic alternatives in areas the place it sees “larger alternative.”


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