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PG&E reports $1.6 billion loss, expects wildfire, blackout issues to cost $6.3 billion

Michael McGough, The Sacramento Bee on

Published in Business News

PG&E Corp. reported Thursday $1.6 billion in shareholder losses for the third quarter of 2019, resulting primarily from insurance claims associated with the 2018 Camp Fire and 2017 Northern California wildfires for which the utility company's equipment has been blamed.

And PG&E estimates that those claims -- combined with factors including potential liability for the Kincade Fire, customer credits the company has promised for its first round of "public safety power shutoffs" this October and its bankruptcy restructuring -- will cost the company $6.3 billion over an unknown timeline.

The insurance claims alone carried a pre-tax charge of about $2.5 billion for the most recent quarter. Those, plus "enhanced and accelerated electric asset inspection costs; clean-up and repair costs related to the 2018 Camp fire; legal and other costs related to the 2017 Northern California wildfires and the 2018 Camp fire" and costs associated with PG&E's reorganization under its Chapter 11 bankruptcy filing, cost Pacific Gas and Electric Co. a total of about $2.2 billion after taxes, the utility company said in a news release.

The $1.6 billion shareholder loss works out to a drop of $3.06 a share. PG&E stock opened Thursday at about $6.50 a share. The stock had plummeted below $5 a share late last month, as reports indicated the possibility that the destructive Kincade Fire in Sonoma County may have been sparked by a malfunctioning PG&E transmission tower. PG&E filed an incident report with the state Public Utilities Commission one day after the fire started, reporting a "broken jumper" on a transmission tower.

The earnings report comes as PG&E faces extreme scrutiny from Gov. Gavin Newsom, the PUC, local government leaders and the public. PG&E intentionally cut power to millions of Northern Californians in four separate "public safety power shutoff" events last month, an effort by the troubled utility provider to mitigate the risk of devastating wildfires being caused by their lines. Cal Fire blamed the November 2018 Camp Fire, which killed 85 people, on PG&E equipment failure, as well as a number of fires in 2017.

On Oct. 23, amid one of the recent blackouts, the Kincade Fire ignited and grew rapidly during consecutive severe wind events in the following days. The wildfire consumed over 120 square miles and destroyed 174 homes before Cal Fire reported 100% containment of the blaze Wednesday evening.

Sacramento Mayor Darrell Steinberg and about two dozen other mayors and county supervisors across the state sent a letter to the PUC and Newsom on Tuesday, urging them to turn PG&E into a customer-owned utility rather than an investor-owned corporation.

 

Newsom last week appointed top aide Ana Matosantos to the new role of "energy czar," charged with helping fix statewide utility problems. During a press conference announcing the new role, Newsom also suggested the possibility that the state could take over PG&E.

"PG&E may or may not be able to figure this one out," Newsom said last Friday. "If they cannot, we are not going to sit around and be passive. We are gaming out a backup plan. If PG&E is unable to secure it's own future ... then the state will prepare itself as backup for a scenario where we do that job for them."

(c)2019 The Sacramento Bee (Sacramento, Calif.)

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