PG&E stock dives on reports it may face $30 billion in fire liabilities and may file for bankruptcy
PG&E Corp. stock dived more than 20% Monday morning on reports that the California utility could face at least $30 billion in liability related to fires and has considered filing for bankruptcy protection.
Shares of PG&E — which owns Pacific Gas and Electric Co. — sank 22.1% to $19.01 around 9 a.m. PST.
Investigators have not yet determined the cause of November’s Camp fire, which killed 86 people, destroyed more than 18,000 buildings and ravaged the Northern California town of Paradise.
PG&E, too, has not called itself responsible for the Camp fire. But in November, it told the California Public Utilities Commission that shortly before the fire began, it experienced power outages in the areas close to the blaze’s origin. PG&E has said a transmission line in the area went offline about 15 minutes before the Camp fire was first reported. It also has said it found a damaged transmission tower near where investigators said the fire began.
PG&E equipment was found to have caused or contributed to more than a dozen of the biggest fires in 2017, including the Cascade fire in Yuba County, which killed four people and destroyed hundreds of homes.
The utility said in November that if it were deemed responsible for causing the Camp fire, the liability would exceed its insurance coverage.
On Friday, Reuters reported that PG&E was exploring filing for bankruptcy protection for some or all of its business as it faced the prospect of billions of dollars in liabilities related to wildfires in 2017 and 2018. Citing unnamed people familiar with the matter, Reuters reported that although a bankruptcy filing was not certain, preparations were being made.
When asked about the Reuters report, PG&E spokesman Andy Castagnola said Monday that the company does not comment on “market rumors or speculation.”
CNBC reported Monday that those liabilities could total at least $30 billion, not including “penalties, fines or punitive damages.” Castagnola referred questions about liability to the state Department of Insurance. A department spokeswoman said she would check on the availability of that information.
To manage these potential liability costs, the utility has also considered selling its natural gas division or other major real estate assets such as its San Francisco headquarters, National Public Radio reported Friday.
PG&E said in a statement Friday that it was looking to add new directors to its board, as well as to the board of Pacific Gas and Electric, to “augment its existing expertise in safety, operations and other critical areas.”
The company said it was also “reviewing structural options to best position PG&E to implement necessary changes while meeting customer and operational needs” and had formed a special board committee that would discuss best practices in wildfire safety with independent experts.