SRE, PCG, and EIX: How Free Cash Flows Are Trending



Free cash flow

Free cash flow is generally calculated as the difference between operating cash flow and capital expenditure. It’s a vital metric to use in measuring utilities’ (XLU) performances, mainly due to their heavy capital expenditure needs. Free cash flow is used mainly for dividend payments and expansions.

None of the three top California utilities have generated positive free cash flow in the last few years. Edison International (EIX) generated positive free cash flow of $449 million in 2015 but has floundered since then. Edison International’s (EIX) free cash flow came in at -$448 million last year.


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In 2017, Sempra Energy (SRE) reported free cash flow of -$348 million, while PG&E (PCG) reported free cash flow of -$730 million. The trend of negative free cash flow is not new for US utilities (XLU). In the last few years, electricity consumption fell drastically due to energy efficiency initiatives, while utilities’ capital investments continued to rise. Thus, utilities received less from operations than what they spent on capital expenditures, eventually reporting negative free cash flows.


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