California pension funds losing tens of millions of dollars on PG&E

Nobody is happy about PG&E’s bankruptcy filing, but California’s two biggest public pension systems are positioned to absorb losses on the utility’s stock without major repercussions.

That’s because the pension funds’ multi-million dollar investments in PG&E are tiny fractions of the portfolios that CalPERS and CalSTRS control.

Pacific Gas & Electric Co. and parent company PG&E Corp. filed for bankruptcy Tuesday, citing more than $30 billion in potential exposure from northern California wildfires in 2017 and 2018. Earlier this month, S&P downgraded PG&E Corp.’s credit rating to junk status.

The California Public Employees’ Retirement System, which manages about $350 billion in investments, owned about 1.8 million shares of PG&E Corp. at the end of November, according to the latest figures available from the fund. At the time, the shares were worth about $47 million. CalPERS also owned Pacific Gas and Electric Co. securities worth about $35 million, according to the fund.

The value of CalPERS’ stock shows that PG&E has already taken a serious hit. In June 2016, CalPERS estimated that its PG&E stock was worth $122.7 million.

“CalPERS is aware of PG&E’s bankruptcy filing and will continue to monitor the situation as it progresses,” spokeswoman Megan White said in a statement.

The California State Teachers’ Retirement System, with a market value of about $215 billion, owned about 960,000 shares of PG&E stock as of the end of December, the fund’s latest available figures. At the time, the stocks’ total worth was about $23 million.

“That’s a drop in the bucket in that portfolio,” said Nari Rhee, director of UC Berkeley’s retirement security program.

CalSTRS owned PG&E securities worth about $9.7 million.

Both funds take a passive, long-term approach to investing, holding stocks in indexes of companies in the U.S. and around the world.

CalSTRS spokesman Michael Sicilia said the fund is a passive index made up of stock from the 3,000 largest U.S. companies, so a PG&E bankruptcy wouldn’t necessarily prompt it to take action.

“We don’t buy and sell based on whether a stock is going up or down, but rather rebalance our entire portfolio periodically,” Sicilia said in an email.

This story was originally published January 31, 2019 at 12:34 PM with the headline "California pension funds losing tens of millions of dollars on PG&E."