Shares of Pacific Gas and Electric, the parent company of utility PG&E which services Northern California, have lost half their value amid concerns that the company could be held liable for the state's deadliest wildfire on record.
What's going on: PG&E, whose power lines have been linked to 16 of last year's devastating fires, said in a regulatory filing on Tuesday that its insurance would not fully cover the cost of damages, and there would be a "material impact" on the company's financial health if it were found responsible for the Camp Fire, which destroyed the town of Paradise in Butte County, about 90 miles north of Sacramento. That fire killed at least 48 people, with more than 200 still missing.
The details: The cause of the fire has not been determined yet, but PG&E disclosed that it reported an outage on a transmission line in Butte County at 6:15 a.m. PST on November 8th, 18 minutes before Cal Fire said the blaze began.
- The cost of the Camp Fire damage is projected to reach $15 billion or more, per Citi analyst Praful Mehta. The company is already on the hook for $17.3 billion in potential liabilities for last year's wildfires, according to J.P. Morgan.
- Shares of Edison International, the parent company of utility Southern California Edison, have also dropped more than 20 percent on fears that its equipment could be responsible for causing the Woolsey Fire in Ventura County, which has killed 2 and destroyed more than 300 homes.
In an unprecedented move, PG&E started a program last month to cut power during high winds associated with elevated fire risk, potentially to limit its liability.
- California is one of the few states that hold utilities liable for damages tied to their equipment, even if the companies were in compliance with the state's safety rules.
- A controversial California law passed in September makes it easier for utilities to pass along the costs from fire-related liabilities to customers, but the legislation doesn't guarantee that companies could pass along costs stemming from 2018 fires.
Bottom line: There's serious concern about the fate of PG&E, especially as the risk of wildfires in California rises, and there's more potential for its equipment to be tied to any future damages.