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PG&E Is Having Worst Week in 9 Years as Wildfires Rage

PG&E Is Having Worst Week in 9 Years as Wildfires Rage
(Kornilovdream | Dreamstime)

Friday, 13 October 2017 10:54 AM EDT

PG&E Corp. is about to cap its worst week in nine years on speculation that downed power lines may have played a part in deadly wildfires racing across Napa Valley. 

The shares resumed their slide on Friday, slumping as much as 13 percent, as Evercore ISI said the market’s pricing in “significant financial exposure” to the wildfires.

PG&E’s stock had barely budged earlier this week when the wildfires began spreading, consuming people’s homes and forcing thousands to evacuate.

Then local media began pointing to potential connections between the fires and PG&E power lines knocked down by strong winds. By Thursday, California fire officials had confirmed they’re investigating the role of downed power lines, and utility regulators said they’re looking at PG&E’s maintenance activities in the area.

The stock slid 9 percent to $58.72 as of 10:01 a.m. on Friday, following Thursday’s 6.7 percent retreat. In a statement, San Francisco-based PG&E declined to speculate on the possible causes of the wildfires.

For investors selling off PG&E’s stock, “it’s a case of shoot first and get answers later,” said Paul Patterson, a utility analyst with Glenrock Associates. “It’s fear of the unknown potential costs that the company may face. It’s important to realize that we are in an environment where information is lacking.”

And it’s not the first time the state Department of Forestry and Fire Protection has investigated PG&E. In 2015, a CalFire investigation showed a power-line conductor operated by PG&E ignited the Butte fire that burned more than 70,000 acres, destroyed hundreds of structures and killed two people. And the utility owner is still dealing with the consequences of the deadly 2010 San Bruno gas pipeline explosion after being found guilty of safety violations.

The safety and enforcement division of California’s Public Utilities Commission reminded PG&E in a letter Thursday to preserve evidence related to the wildfires. Spokeswoman Terrie Prosper said the agency was also looking into the company’s activities in the area of the wildfires, “with specific focus on maintenance of facilities and vegetation management practices.”

If the utility is suspected to have been involved, the commission will follow up with “in-depth investigations,” she said.

California Governor Jerry Brown had declared a state of emergency in some counties as 21 large fires burned across 191,000 acres of land as of Thursday, according to CalFire. The blazes have claimed at least 21 lives.

“The patience level of California is very short because of the issues PG&E’s had before,” said Shahriar Pourreza, an analyst at Guggenheim Securities, referring to the Butte fire and also San Bruno.

PG&E said crews were assessing damage to its electric and gas system in Napa and Sonoma counties. About 49,000 customers lacked electricity service in those areas Thursday, according to a statement on its website.

Supporting Reviews

“There will likely be reviews of these wildfires by the appropriate agencies, but right now we are focused on life safety and service restoration,” Jennifer Robison, a company spokeswoman, said by email. “We will support reviews of the causes by any relevant regulator or agency.”

Daniel Berlant, a spokesman for CalFire, noted Thursday that it’s unclear whether downed lines resulted from the wildfires or started them. The agency hasn’t narrowed down its investigation to one particular cause or company, he said.

And California’s utility regulator has a history of conducting lengthy proceedings, said Kit Konolige, an analyst at Bloomberg Intelligence. “Until more details are available,” he said, “investors often take a path of saying maybe I should discount the possibility that there might be some exposure here.”

© Copyright 2024 Bloomberg News. All rights reserved.

PG&E Corp. is about to cap its worst week in nine years on speculation that downed power lines may have played a part in deadly wildfires racing across Napa Valley.
pg&e, worst, week, years, wildfires, rage
Friday, 13 October 2017 10:54 AM
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