PG&E negotiates price cuts on five solar, battery contracts

FILE PHOTO: A PG&E truck carrying an American Flag drives past PG&E repair trucks in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

(Reuters) - PG&E Corp PCG.N on Thursday told a U.S. bankruptcy judge that it had reached agreements to cut prices by at least 10% on five power contracts, according to court papers.

The company said it had reached the deals with three energy generators and storage providers, including Recurrent Energy, a unit of Canadian Solar Inc, as well as energy storage providers mNOC AERS LLC and Hummingbird Energy Storage LLC.

PG&E said in court papers on Wednesday that it “strongly disagrees” with a suggestion in a Wall Street Journal article that the utility company knowingly deferred maintenance on equipment that caused California’s Camp Fire, the deadliest and most destructive wildfire in the state’s modern history.

PG&E’s bankruptcy poses a major threat to up to $42 billion of power contracts, mainly for renewable solar and wind energy. Those agreements are critical to California’s goal of reducing greenhouse gas emissions and meeting its aggressive climate goals and what happens to them in bankruptcy is being closely watched by both investors and state officials.

The utility estimates that it can save about $20 million from the negotiated discounts, PG&E said, adding that the companies had asked PG&E to renegotiate their contracts to stem the uncertainty and the risk of obtaining the financing needed to complete underlying projects.

The deals include three solar projects by Recurrent and two battery storage projects.

A U.S. bankruptcy court ruling in June that a federal regulator had no say in whether utility PG&E may reject its power purchase agreements if it chooses to while in bankruptcy.

Power producers NextEra Inc NEE.N, Consolidated Edison Inc ED.N and Calpine Corp, who also hold major power contracts with PG&E, said then they will appeal that decision.

Reporting by Shanti S Nair in Bengaluru, editing by G Crosse