Across America, utility executives are getting grilled this earnings season about the consequences of tax reforms, slackening growth and possible mergers. In California, though, Wall Street just wants to know one thing: Are power companies going to take the heat for deadly wildfires?
California’s two largest utilities, PG&E Corp. and Edison International, have both seen billions of dollars of their market value wiped out by devastating fires that broke out last year. Because of a state law, they could end up on the hook for damages if downed power lines were the cause. Their chief executive officers were prepared for a flood of questions from analysts about the blazes during their earnings calls, and they seized the moment to deliver what was essentially the same line: Climate change is the real problem.
Edison International was the latest to point a finger at global warming on Thursday. “Communities across California have been tragically affected as climate change has increased the severity and frequency of wildfires in recent years,” CEO Pedro Pizarro said in the company’s earnings call. “This is a statewide crisis that needs a statewide solution.”
Just two weeks earlier, PG&E CEO Geisha Williams similarly warned investors that California’s dealing with a “new normal” when it comes to climate threats.
The strategy could help PG&E and Edison fight the California law known as “inverse condemnation” that holds utilities liable for damages if their equipment’s found to have caused a wildfire – even if they followed safety rules. Edison and PG&E both said during their earnings calls that they’re pressing lawmakers and regulators to change the policy.
During PG&E’s call, Williams used climate change to argue against the law, describing it as “ultimately a societal issue” that requires “holistic solutions.”
Their strategy may already be catching on. While fire officials are still investigating whether fallen PG&E and Edison power lines are to blame for the devastating fires that destroyed thousands of structures, both California Governor Jerry Brown and the state’s top utility regulator have blamed global warming for more intense wildfires.