UK-based news service Reuters reported last week that Pacific Gas and Electric (PG&E) is exploring the possibility of “filing some or all of its business for bankruptcy protection” as a hedge against the potential legal and monetary fallout of recent California wildfires.
According to the report:
The company is considering the move as a contingency, in part because it could soon take a significant financial charge for the fourth quarter of 2018 related to liabilities from the blazes. [...]
A bankruptcy filing is not certain, sources said. The company could receive financial help through legislation that would let it pass on to customers costs associated with fire liabilities, the sources said. But that is just a possibility, they said, so bankruptcy preparations are being made.
PG&E spokesperson Kristi Jourdan declined to confirm or deny the report while at the same time attempting to cast Reuters’ reporting as speculative, telling Curbed SF, “We do not comment on market rumor or speculation.”
The same day, NPR reported that PG&E might sell off its natural gas division to help cover liability costs.
“All net proceeds from the sale of PG&E’s gas division would be used to set up a fund to pay billions of dollars in potential claims from wildfires,” said NPR, citing company sources who requested anonymity to protect their jobs.
According to PG&E, the company’s gas system “spans 70,000 square miles and serves one out of every 20 Americans.”
In November, the non-profit news site Cal Matters explored the possible ramifications of bankruptcy for the San Francisco-based utility, which employs tens of thousands of Californians and provides power to millions more.
Under a Chapter 11-style bankruptcy, “the lights would stay on and utility workers would keep working” while the company experiences “reorganization” behind the scenes, something that happened once before in 2001.
“Ratepayers were stuck with paying back the bills for years and years” on PG&E debts after that,” Cal Matters notes.
According to PG&E, Cal Fire has alleged that the utility’s equipment started 18 fires since 2017 and that 11 of those fires “involved violations of state law.”
The two most serious recent fires, the 2017 Tubbs Fire and 2018 Camp Fire—which between them destroyed tens of thousands of homes and killed nearly 100 people in Sonoma and Butte counties—are still under investigation. But fear that PG&E may possibly be found responsible for those blazes has generated anxiety about the utility’s future.
The company also faces several private lawsuits over its potential role in California wildfires.
All of this bad news has meant PG&E’s share price has taken a beating, dropping again by nearly six dollars on Monday morning to $18.50 a share.
On November 8, the day the Camp Fire started, PG&E opened at nearly $48 but began dropping almost as soon as reports of the fire spread.