Coverage: PG&E plunges amid evidence it may be at fault for California wildfires
Shares of utility PG&E fell 21 percent on Wednesday after the company said that if its equipment is responsible for the “Camp Fire” burning in Northern California, the cost of the damage would exceed its insurance coverage and harm its financial health.
Thomas Franck of CNBC.com had the news:
“While the cause of the Camp Fire is still under investigation, if the Utility’s equipment is determined to be the cause, the Utility could be subject to significant liability in excess of insurance coverage,” the company said in a document filed with the Securities and Exchange Commission on Tuesday. That would “have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.”
The plunge in the company’s stock erased $3.7 billion in value as its market cap slid to $13.3 billion from $16.9 billion.
PG&E, owner of Pacific Gas & Electric Co., said its subsidiary has drawn down $3 billion from its credit line in anticipation of a fire-related liability. At least 48 people have died in the fire and a record 7,600 homes and other structures have been destroyed, according to official estimates. Hundreds of people remain missing.
Alejandra Reyes-Velarde of the Los Angeles Times reported that some homeowners have already sued PG&E:
Some who lost homes in Paradise have already sued PG&E, accusing the utility of negligence and blaming it for the fire.
The financial costs of the deadly blaze are expected to be staggering.
After destructive fires swept through wine country last year, PG&E faced similar liability questions. Wall Street estimates the utility giant faces up to $15 billion in liabilities from those fires, which also burned thousands of homes. It has raised the possibility of bankruptcy if it cannot get some relief.
Investigators already have linked PG&E lines to some October fires, including the Atlas fire that killed six people and destroyed 400 homes, and the Redwood Valley fire that killed nine and destroyed 500 structures. Officials continue to investigate the cause of the largest of the wine country fires, the Tubbs fire, which swept into Santa Rosa.
J.D. Morris of the San Francisco Chronicle reported that its line near the fire’s origin was not the one it reported with problems:
PG&E acknowledged that it had communicated with a Butte County resident last week about plans to work on a transmission line on her property. Betsy Ann Cowley, 31, of Pulga, said she received an email from the utility the day before the fire began saying it needed to repair some equipment on or near her property, which is close to the spot where authorities say the Camp Fire started Thursday.
PG&E also told state regulators that a power line near the origin point experienced a problem just before the fire broke out east of Chico.
But the email to Cowley was about “future planned work on a different transmission line in the area,” PG&E spokesman Paul Doherty said in an email Tuesday evening.