PG&E's exoneration from fire seen as too little, too late

Reuters

Reuters

Shares of PG&E Corporation (NYSE:PCG) is a laggard after California's struggling utility company suggested it will still pursue bankruptcy protection, despite fire investigators deciding that the Tubbs wildfire in 2017 that killed 22 people in Northern California stemmed from a private electrical system and not PG&E's equipment.

PG&E's chief executive recently resigned and Chairman Richard Kelly said the company is committed to "further change" and searching for a new leader with "extensive operational and safety expertise" while its general counsel helms operations on an interim basis.

Newsom said his goal is to make sure victims are made whole, that the state has "safe, reliable and affordable service", and that ratepayers "are not paying the price of the neglect" by PG&E established in past wildfires. In bankruptcy court, the wildfire victims have little chance of getting punitive damages or taking their claims to a jury, and many experts think they will have to settle for less money.

Investigators confirmed a 2017 wildfire that killed 22 people in Northern California wine country was caused by a private electrical system, not equipment belonging to embattled Pacific Gas & Electric Corp, as had initially been suspected. Maybe this court isn't the most qualified place to decide how to fix the problem but something obviously has to be done given the number of deadly wildfires caused by the company's equipment in the past two years.

At the time of writing the PG&E shares are at a value of $13.01 and showing 30% gains an hour into postmarket trading. PG&E's stock is still down 80% from the high point it reached in August 2017.

The Camp Fire, which killed 86 people and destroyed almost 19,000 buildings after it started in Butte County Nov. 8, far surpassed the Tubbs Fire's record as the most destructive wildfire in state history. The California Department of Insurance has said insured losses from a series of 2017 North Bay fires, including Tubbs, were $8.2 billion.

Reports indicate that PG&E equipment may still have caused at 17 out of the 21 fires in California during 2017.

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The Tubbs wildfire burns behind a winery in Santa Rosa, Calif., in 2017. Another reported seeing the fire approach a PG& E power pole.

Blame for the Tubbs Fire would have carried a big price. But Travis Miller, an analyst at Morningstar, said the 2018 Camp Fire, the deadliest in California history, "remains a major financial concern for PG&E".

Sonoma County Counsel Bruce Goldstein said on Thursday that the county's lawsuit seeking compensation for damages from the Tubbs Fire would not be affected.

The report on the Tubbs fire - the second-most-destructive blaze in California history - had analysts questioning whether PG&E should still file for bankruptcy as planned on January 29.

"From the victims' perspective, there are a lot of open-ended questions", Newsom said. And that still probably won't be enough to prevent the state's largest utility from going bankrupt as it faces billions of dollars in wildfire liabilities.

Moody's, one of the agencies that downgraded PG&E, still expects the company to file for bankruptcy, Cassella said. The state firefighting agency did not find any violations of state law in its investigation of the Tubbs Fire. It hasn't offered a breakdown on the potential costs from the Tubbs Fire.

Cal Fire didn't name her in the report but listed the same address in Calistoga that PG&E cited.

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