PG&E’s stock soars on New York Stock Exchange as its financial outlook brightens
With Cal Fire absolving PG&E for causing the fatal 2017 Tubbs fire, the company’s stock rebounded sharply Thursday even though investors and attorneys remain uncertain over the utility’s financial outlook and whether its expected bankruptcy filing is warranted.
California’s largest utility said last week it would seek Chapter 11 bankruptcy protection from creditors on Jan. 29, citing $30 billion in potential damages related to active and potential lawsuits resulting from the 2017 and 2018 California wildfires.
On Wednesday, PG&E increased its estimated liabilities to between $75 billion and $150 billion, anticipating a federal judge soon will order the company to take the expensive steps of inspecting its entire electrical grid and starting a broad vegetation management effort before the 2019 fire season in Northern California.
Despite the California Department of Forestry and Fire Protection report clearing the utility of an estimated $17 billion of liabilities in Sonoma County from the historic Tubbs fire, a PG&E spokeswoman said the dire financial “situation has not changed.”
“Regardless of today’s announcement, PG&E still faces extensive litigation, significant potential liabilities and a deteriorating financial situation, which was further impaired by the recent credit agency downgrades to below investment grade,” the San Francisco-based utility said in a statement that gave no indication it now was going to shift away from a bankruptcy filing.
“Resolving the legal liabilities and financial challenges stemming from the 2017 and 2018 wildfires will be enormously complex and will require us to address multiple stakeholder interests, including thousands of wildfire victims and others who have already made claims and likely thousands of others we expect to make claims.”
State Sen. Mike McGuire, D-Healdsburg, said there was no appetite in the state Legislature to intervene with financial help for PG&E to prevent its bankruptcy filing.
“They need to show the state how they are going to dig themselves out of the financial mess they’re in,” McGuire said. “The ball is in PG&E’s court.”
For the lawyers representing Sonoma County fire survivors, the greater concern remains a possible bankruptcy filing that would immediately halt action on the more than 3,000 liability lawsuits accusing the utility of causing the 2017 Northern California fires.
Noreen Evans, a Santa Rosa attorney with Watts Guerra, said her firm will push forward with claims for the 2,000 fire victims she represents, including several hundred who lost property in the Tubbs fire. That fire, the most destructive in California history at the time, killed 22 people and destroyed more than 5,600 homes and other buildings.
A PG&E bankruptcy likely would alter proceedings in her cases, however.
“Nobody really knows what to expect,” Evans said. “The whole purpose of bankruptcy is to put all debts on the table and figure out how PG&E can pay. We potentially could see a delay, or potentially some reduction in compensation. It could also be the reverse — it could go faster, because the bankruptcy court will be interested in getting PG&E’s debts restructured.”
Evans also questioned the timing of Cal Fire’s report, citing the positive investor reaction that drove up the company’s stock price Thursday. PG&E’s stock soared nearly 75 percent to close up $5.96, at $13.95 per share on the New York Stock Exchange.