PG&E expects wildfire restoration costs to hit up to $200M
- Pacific Gas and Electric officials estimated restoration and repair costs from the massive wildfires that swept through California's Wine Country in October could reach $200 million.
- In its third quarter earnings call, CEO Geisha Williams noted the utility has already committed $3 million to help affected communities, and addressed the media reports that its equipment possibly caused the wildfires, saying it was too early to determine a cause.
- Early media reports noted several incidents of sparking wires and other issues with PG&E's power equipment, and regulators requested the utility preserve any evidence connecting them to the wildfires that scorched Sonoma and Napa Counties. The utility's stock tumbled 16% in the aftermath — it's worst one-week performance since 2008, according to Bloomberg.
CEO Williams tried to soothe investor concerns over wildfire costs and whether the utility will be held liable.
"This was an extraordinary confluence of events, and right now, it's simply too early to make an assumption about liability," she said. In a legal filing November 9, PG&E tried to shift blame to third-party equipment as a possible cause.
The utility is working closely with the California Department of Forestry and Fire Protection (CAL Fire) and the Public Utilities Commission (CPUC) to file incident reports and turn over any evidence related to the wildfires, she added. The size and complexity of the wildfires, which burnt roughly 122,000 acres, means CAL Fire's determination of cause will take time.
"In the meantime, we will continue to cooperate with investigators and regulators while keeping our team focused on providing safe, reliable energy to our customers and communities," she said. While the utility has $800 million in liability insurance, any amount exceeding that could "materially affect" it.
PG&E is already facing $1.1 billion in liability and restoration costs related to the 2015 Butte Fire. Regulators fined the utility $8.5 million for failure to properly maintain a power line deemed responsible for sparking the fire, and additional lawsuits have added to the costs.
Williams said California is the only state whose courts apply "inverse condemnation liability" to events caused by power equipment. This means the utility can be held liable for property damage and attorney's fees if equipment is found to cause "substantial damage" in an event such as a fire, even if the company complied with state standards and mandates.
Williams noted that PG&E would challenge any attempts to apply that to this fire.
"However, if it is applied, then the CPUC should take action that is consistent with the purpose of the doctrine," Williams added.
- Seeking Alpha PG&E (PCG) Q3 2017 Results - Earnings Call Transcript
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