PG&E Corp. (PCG Quick QuotePCG - Free Report) recently won an approval from the California Public Utilities Commission for the sale of its San Francisco headquarters to real estate development giant, Hines. The transaction, which is valued at $800 million, comprises all the six buildings included in PG&E headquarters.

 

The deal is part of PG&E’s long-term plan to relocate its headquarters from San Francisco to Oakland, beginning in 2022.

In June 2020, PG&E unveiled its plan to shift its headquarters to Oakland in a bid to achieve short-term cost savings. Apart from boosting tax revenues for both San Francisco and Oakland, the move is projected to reduce the company’s long-term headquarter expenses. Cumulatively, these factors are likely to bolster the company’s bottom-line performance in the long-run.

 

The company has proposed to return $400 million in net savings to its customers by lowering their future utility rates over a period of five years. This might attract more customers, thereby resulting in a modest customer growth.

 

The new headquarters also provide a more well-organized and effective workspace for the PG&E workforce to work more efficiently. PG&E intends to remove its satellite offices in Concord and San Ramon and consolidate them into the new Oakland headquarters, which in turn will streamline its entire workplace area into one corporate headquarter. This will further lower the company’s real estate costs.

Going forward, increased electricity demand will definitely boost revenues of the utilities. Thus, the growth prospects have been encouraging the utilities to invest heavily in expansion projects. According to the U.S Energy Information Administration, U.S. retail sales of electricity will increase by 2.7% in 2021. Apart from PG&E, other companies that are investing heavily in order to tap the increased demand and boast solid prospects are:

 

Duke Energy (DUK Quick QuoteDUK - Free Report) intends to expand its scale of operations and implement modern technologies at its facilities by investing $59 billion in infrastructure and expansion projects during the 2021-2025 period. It has a long-term earnings growth rate of 4.7%.

 

Otter Tail Corporation (OTTR Quick QuoteOTTR - Free Report) makes consistent investments to upgrade and maintain the existing infrastructure to provide 24x7 reliable services to its customer base. The company has plans to invest $762 million in the 2021-2025-time period in electric, manufacturing and plastics segments. It has a long-term earnings growth rate of 5.3%.

 

NextEra Energy (NEE Quick QuoteNEE - Free Report) has well chalked out plans to invest more than $60 billion in different projects during the 2019-2022-time period. These investments will be directed at modernizing and strengthening the existing infrastructure of the company, thus enabling it to serve the expanding customer base more effectively. It has a long-term earnings growth rate of 8.3%.

In the past one year, shares of the company have lost 78.2% against the industry’s growth of 55.8%.

 

PG&E currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.