Does anyone have any guidelines how to spot a potential Electric Utility Bankruptcy. I remember PG&E back in 2001 recession, how negative cash flows and problems just kept building quarter after quarter and the stock was down to 11-13 per share, halved and then the BIG ANNOUNCEMENT: Cash Starvation, borrowing to pay divy and other costs,, then this.....
PG&E seeks bankruptcy
April 6, 2001: 3:02 p.m. ET
California's utility says bankruptcy won't affect service, no layoffs planned
NEW YORK (CNNfn) - Pacific Gas & Electric Co., California's largest utility, filed Friday for bankruptcy protection from creditors because of unreimbursed power costs that are now running at more than $300 million a month.
The company, a unit of PG&E Corp. (PCG: Research, Estimates), filed for Chapter 11 bankruptcy protection in Northern California despite months of efforts by state officials to bail out the cash-starved company.
I see similar negative FREE CASH FLOWS, and management stated that divy may not be maintained, is this company heading forward toward BK just like the Fedl. Gov., borrow, borrow borrow with no concept of what tomorrow will be.
Nice try at spreading partial info #$%$. Here's the whole story and it doesn't relate to EXC. Source- Wikipedia. In 1998, a change in the regulation of California's public utilities, including PG&E, began. The California Public Utility Commission (CPUC) set the rates that PG&E could charge customers and required them to provide as much power as the customers wanted at rates set by the CPUC.
In the summer of 2001 a drought in the northwest states and in California reduced the amount of hydroelectric power available. Usually PG&E could buy "cheap" hydroelectric power under long term contracts with the Bonneville Dam, etc. Drought and delays in approval of new power plants and market manipulation decreased available electric power generation capacity that could be generated in state or bought under long term contracts out of state. Hot weather brought on higher usage, rolling blackouts. etc..
With little excess generating capacity of its own PG&E was forced to buy electricity out of state from suppliers without long term contracts. Because PG&E had to buy additional electricity to meet demand some suppliers took advantage of this requirement and manipulated the market by creating artificial shortages and charged very high electrical rates. The CPUC refused to adjust the allowable electric rates. Unable to change rates and sell electricity to consumers for what it cost them on the open market PG&E started hemorrhaging cash.
PG&E Company (the utility, not the holding company) entered Chapter 11 bankruptcy April 6, 2001. The state of California tried to bail out the utility and provide power to PG&E's 5.1 million customers, under the same rules that required the state to buy electricity at market rate high cost to meet demand and sell it at lower fixed price, the state also lost significant amounts of money.
The crisis cost PG&E and the state somewhere between $40 and $45 billion dollars. There is some evidence that this crisis played an important part in the eventual recall of California Governor Gray Davis.
PG&E Company, the utility, emerged from bankruptcy in April 2004, after paying $10.2 billion to its hundreds of creditors. As part of the reorganization, PG&E's 5.1 million electricity customers will have to pay above-market prices for several years to cancel the debt.
I am afraid it is time to pay the piper. I would be 100% cash, wait for the shakeout. 60-90% drop and massive municipality bankruptcies, massive corporate bankruptcies and personal bankruptcies, no one can pay the debt. Unfund pension liabilities will bring down along with account delinquencies many utilities. Bankruptcies like we had in the 1980's from the energy boom and bust VERY VERY VERY LIKELY. The causes, bubble markets and enormous debt, This will all correct. EXC will probably reorganize, bond holders will loose, and debt holders and divy will go to zero new stock issued with $5 or $10 price and divy of 50 cents per year.