PG&E lost $2.6 billion in the second quarter off wildfires and bankruptcy
PG&E Corp., the bankrupt California utility giant, reported a $2.6-billion second-quarter loss and said it expects more charges this year tied to wildfires that devastated the state in 2017 and 2018.
The company, which didn’t provide an outlook for results, raised its 2019 forecast for after-tax costs tied to the blazes and its Chapter 11 case to as much as $4.1 billion, up from $1 billion to $1.4 billion. The San Francisco-based company filed for bankruptcy protection in January facing an estimated $30 billion in liabilities from wildfires blamed on its equipment.
“I don’t think anyone would expect this is the final word on charges,” said Kit Konolige, a utility analyst for Bloomberg Intelligence.
PG&E’s bankruptcy case, the largest utility reorganization in U.S. history, has attracted some of the biggest names in the investment world including Pacific Investment Management Co. (Pimco), Elliott Management Corp. and Davidson Kempner Capital Management. On Thursday, two hedge funds disclosed that they’re seeking to raise $15 billion of equity to bolster the company’s plans to exit bankruptcy.
The utility’s second-quarter loss included a $3.9-billion pretax charge, and its adjusted earnings of $1.10 per share beat analysts’ estimates by 11 cents, according to a statement Friday. The company’s stock declined 2.1%.
PG&E posted the additional losses as it lobbies for legislation that would allow it to issue tax-free municipal bonds to pay for 2017 and 2018 wildfire claims. The bonds would be backed by its future profits.
A bill is likely to be introduced as early as next week as state lawmakers return from recess, according to people familiar with the matter who asked not to be identified because the information isn’t public. PG&E said it couldn’t comment on bill language that hasn’t been introduced.
“We recognize we are operating from a deficit when it comes to public trust, and to regain that trust, we must sustain excellent operational performance day after day, month after month, year after year,” PG&E Chief Executive Bill Johnson said in the statement Friday.
The results came on the same day as a deadline for PG&E and other parties to submit recommendations to the judge overseeing the company’s Chapter 11 proceedings on how to evaluate competing restructuring proposals. A group of creditors including Pimco and Elliott are pushing to take control of PG&E. The bondholders have put forward a $31-billion proposal that could give them control of 95% of PG&E’s stock.
After it exits bankruptcy, PG&E has agreed to make a $4.8-billion initial contribution to a $21-billion state wildfire fund. It will help utilities pay for future claims from wildfires tied to their equipment.