PG&E Pressed to Pin Down Potential Liabilities From California Wildfires
PG&E Corp. had few answers Thursday as analysts pressed the utility to address its potential liability in the wildfires that killed more than 40 people in California last month.
California fire officials and utility regulators are investigating the cause of the wildfires, including whether some were sparked by power lines maintained by PG&E arm Pacific Gas & Electric Co., California's largest investor-owned utility.
Chief Executive Geisha Williams pushed back at analysts seeking to pin down how the utility would respond if its equipment was found to have caused some of the more than a dozen fires, and what that might mean for the company and its investors.
"This was an extraordinary confluence of events and right now it's simply too early to make an assumption about liability," she said while discussing PG&E's quarterly earnings.
The state investigation is expected to take months. But PG&E on Thursday said it knows of at least nine lawsuits filed against it already in connection with the fires, and said there may be more to come. The suits, filed on behalf of more than 100 residents and business owners, claim PG&E was negligent and owes damages under a provision in the California constitution called inverse condemnation. The company said it would contest any inverse condemnation claims.
Investors have reacted to PG&E's potential liability; shortly after the wind-driven blazes began, they sent the utility's stock down sharply. Though PG&E's shares have rebounded since, they were trading at about $57 Thursday, more than 17% below where they were before the fires.
State regulators have sent letters to PG&E as well as AT&T Inc., Verizon Communications Inc. Comcast Corp. and others, directing them to "preserve all evidence with respect to the Northern California wildfires, " including failed or damaged poles.
PG&E has already filed 20 incident reports detailing damage to equipment, like downed power lines, across several California counties, including Napa and Sonoma in the heart of the state's wine country. Much of the damage, the reports said, occurred in areas where trees and tree limbs fell and where high winds were recorded.
Heather Williams, a spokeswoman with the California Department of Forestry and Fire Protection, or Cal Fire, said utility equipment is only one of the potential culprits being examined by investigators.
PG&E spends hundreds of millions of dollars annually to manage vegetation around its equipment and facilities. In 2016, for instance, it removed 236,000 dead or dying trees -- in addition to the regular pruning it does -- around its power lines. The company said it inspects lines in high fire-danger areas at least twice a year and as much as four times a year.
For the past four years, it has also helped fly daily aerial patrols in Northern California during wildfire season in an effort to spot blazes for firefighters.
PG&E has faced regulatory fines and private litigation over disasters before.
The utility spent $565 million to settle private lawsuits filed after a 2010 explosion of a natural gas pipeline in San Bruno, Calif., that killed eight people and destroyed a neighborhood. That came on top of a $1.6 billion fine from the California Public Utilities Commission related to the explosion.
PG&E currently faces claims from around 1,600 households affected by a 2015 blaze called the Butte fire that ignited when a pine tree fell on an electric line, ultimately killing two people and taking out hundreds of structures.
Regulators also fined PG&E $8.3 million in April for failing to identify as dangerous the tree that caused the Butte fire. A judge ruled in June that PG&E can be held liable for inverse condemnation.
The utility has settled with an additional 500 or so households in that case, said Amanda Riddle, one of the lead attorneys in the case. PG&E hasn't admitted liability.
--Sara Randazzo contributed to this article.
Write to Erin Ailworth at Erin.Ailworth@wsj.com
(END) Dow Jones Newswires
November 02, 2017 16:18 ET (20:18 GMT)