UPDATE: ISI Group Downgrades PG&E Following CPSD Amended Reply Brief Filing

In a report published Wednesday, ISI Group analyst Greg Gordon downgraded PG&E PCG from Buy to Neutral, but reiterated the $45.75 price target.

In the report, ISI Group noted, “The CPSD filed an amended reply brief on 7/16/13 in the San Bruno pipeline proceeding, which modified its prior recommendation on fines and penalties in four important ways (all of which, if ultimately adopted, would be negative for PCG). The amended brief recommends that 1) at a minimum, $300m of the $2.25 penalty be paid as a non-tax deductible fine to the CA State General fund; 2) that $1.169 Bn of Phase I PSEP costs that were previously authorized for rate recovery be borne by shareholders (including $1 Bn of capital that would have been included in rate base); 3) that $200 million of equity already raised to fund expected fines and penalties not be included in the $2.25 billion calculus, and 4) that PCG's estimated contingency of $380 million for PSEP not be included in the $2.25 billion (the company has indicated it expects to spend in excess of this initial contingency estimate on the PSEP).”

PG&E closed on Tuesday at $46.37.