With its stock price chopped in half and the prospects of credit ratings dropping below investment grade, Pacific Gas and Electric Co. (PG&E) on Thursday was teetering financially as it focused on cleaning up amidst one of the worst wildfires in California's history.
Mizuho Energy Analyst Paul Fremont estimated that San Francisco-based PG&E could potentially be exposed to an after-tax liability of $13 billion for the Camp Fire, which was still burning and could possibly be linked to the failure of the company’s equipment. PG&E's drawdown of $3 billion in credit facilities "is a clear signal that the company is worried about its access to capital markets," Fremont said.
Fremont said that if the utility's cash position worsens over time, "the risk of bankruptcy could increase" unless state lawmakers intervene. "For now, we look for signs of additional legislative and regulatory support for PG&E as the company works through various legal processes with the California Department of Forestry and Fire Protection."
Earlier this year, California adopted a law providing the state's major utilities with protections regarding liabilities with last year's horrific wildfires. PG&E is thought to be liable for 17 separate fires. SB 901, however, does not provide any protection regarding this year's fires.
A utility spokesperson said that the cause of the Camp Fire is still undetermined. The utility borrowed from its credit facility "to provide greater financial flexibility, including for general business purposes and to pay down upcoming debt maturities,” she said.
The loss of life and property is "staggering, and right now, our entire company is focused on supporting first responders. Nothing is more important than the safety of our customers, employees, contractors and communities we serve."
PG&E on Thursday said it established a base camp of 900 employees at Tuscan Ridge, a former golf course in Chico, CA, about six miles from the Camp Fire. Meanwhile, state officials reported that the fire has consumed 140,000 acres and is roughly 40% contained, while in Southern California, the Woolsey Fire covered nearly 100,000 acres and was 57% contained..
PG&E has been able to assess all of its gas system in Paradise and about 75% of the electric system it has access to. Gas service has been turned off to about 12,000 homes and businesses, according to a utility spokesperson.
Some 2,200 electric customers who lost power due to the Camp Fire have had their power restored.
Earlier this week, some homeowners who lost their properties in Paradise filed legal action against PG&E, alleging it was negligent in failing to properly inspect and manage its transmission power lines through the area.