Prudential Securities lifted its rating on Pacific Gas & Electric Co. (PCG) to hold from sell.
According to analyst Carol Coale, the upgrade came as it appears that bankruptcy now appears less imminent after an independent audit concluded that California utilities can recoup the billions owed in purchase-power costs through higher retail rates retroactive to August 2000. Coale notes that California's government introduced a power plan that addresses most of the deregulated structure problems but not the retail rate issue. She views the retail-rate rise as a sticking point in the state's power bill, which is likely to meet opposition from ratepayers. Coale set a $16 price target.