California prides itself on its green credentials. But extreme climate events are putting these ambitions to the test. The state’s power grid nearly maxed out last week after an unprecedented September heatwave sent demand soaring to record levels.
But bad news for California may be good news for local utility companies. The share prices of two of the biggest — Sempra Energy, owner of San Diego Gas and Electric, and Edison International, which owns Southern California Edison — have climbed by more than a fifth since June. PG&E, which emerged from Chapter 11 bankruptcy just two years ago, has booked an even steeper one-third jump in value over the period.
Some of these gains come from investors looking for shelter from higher inflation and interest rates. Utilities, with their stable cash flows and dividend payouts, offer that in spades. But record energy demand and higher prices also bode well for the sector’s bottom-line. Both Edison and Sempra are expected to more than double their net income this year. PG&E is on track to deliver its first annual profit in five years.