Some analysts predict the latest court ruling will add as much as $15bn to PG&E's wildfire costs as its shares tumble to $10.67
Some analysts predict the latest court ruling will add as much as $15bn to PG&E's wildfire costs
US utility PG&E suffered a 25% hit to its shares this week after the latest court ruling on its alleged culpability for wildfires that ravaged Northern California in 2017 and 2018.
Judge Dennis Montali ruled last week that a jury could decide whether the company should be held liable for the damages caused by the Tubbs Fire in 2017, specifically, which killed 22 people.
The news has led analysts to anticipate a potential $15bn addition to the wildfire costs for PG&E, which filed for bankruptcy in January this year and now has share price value of $10.67, making for a 55% drop since the start of the year.
The utility had been cleared of any potential guilt by Californian agency CalFire following an investigation, but the victims of the blaze have been pushing for a full civil trial ever since.
PG&E said in a statement: “Regardless of the next legal steps, CalFire has already determined that the cause of the 2017 Tubbs Fire was not related to PG&E equipment.
“We intend to co-operate with the state court in order to help achieve the June 30, 2020 deadline to participate in the new state Wildfire Fund established by Assembly Bill 1054.”
PG&E shares continue to tumble in 2019 as wildfire saga rages
PG&E is facing billions of dollars in liabilities for its alleged role in causing dozens of wildfires that wreaked havoc in Northern California over 2017 and 2018. This included November’s Camp Fire – the single most destructive wildfire in state history.
It blazed over an area equal to the size of Chicago and took the lives of 86 people, burning 14,000 homes to the ground and causing $7bn (£5.4bn) in damages in the process.
PG&E’s shares plummeted by as much as 63% after initial investigations into the source of the disaster determined the company’s power lines were to blame – though this is not yet conclusive.
After former CEO Geisha Williams stepped down, interim CEO John Simon said on 13 January in a statement: “The people affected by the devastating Northern California wildfires are our customers, our neighbours and our friends.
“We understand the profound impact the fires have had on our communities and the need for PG&E to continue enhancing our wildfire mitigation efforts.
“We remain committed to helping them through the recovery and rebuilding process – we believe a court-supervised process will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion.
“We expect it will enable PG&E to access the capital and resources we need to continue providing our customers with safe service and investing in our systems and infrastructure.”
Initial examinations of the possible causes of Camp Fire found it was caused by a PG&E power line coming into contact with nearby trees, with the company reporting an outage in the vicinity just 15 minutes before the devastating blaze started.
According to a letter it sent to regulators, the company found a fallen power pole peppered with bullet holes in the burn area, but the state’s response to this is not yet clear.
In response to the Camp Fire victims’ lawsuit, PG&E said at the time: “It’s important to remember that the cause of Camp Fire has yet to be determined.
“The safety of our customers and the communities we serve is our highest priority – we are aware of lawsuits regarding Camp Fire.
“Right now, our primary focus is on the communities and supporting first responders as they work to contain the fire and getting our crews positioned and ready to respond when we get access, so that we can safely restore gas and electricity to our customers.”
PG&E’s response to 2017 and 2018 blazes
Since PG&E filed for bankruptcy in January this year, it has been fighting a series of legal battles to determine which fires the company may or may not have been responsible for.
In an effort to guard against a similar situation arising in the future, it has expanded its Community Wildfire Safety Program, which seeks to further reduce wildfire risks and help keep customers and communities safe.
As part of this expansion, the firm hosted nearly 6,000 people in a series of informational open houses, webinars and workshops throughout its service area on 19 August.
Senior vice president and chief customer officer Laurie Giammona said: “In order to be successful in wildfire safety efforts, we know we need to work together with our customers and our communities to share information and help everyone prepare.
“Having the opportunity to listen to our customers’ feedback and answering their questions is essential, and we appreciate everyone who has taken the time to participate in these events.”