California Regulator Eases Concerns Over Utility’s Ability to Pay for Wildfire Damages

By JONATHAN J. COOPER | November 19, 2018

Shares of Pacific Gas & Electric Co. soared Friday after California’s top utility regulator said his agency will help the company deal with potentially crippling liability costs from wildfires.

Stock prices soared 36 percent in midday trading after plunging 60 percent and losing $15 billion in valuation in the week following the Northern California wildfire that is the nation’s deadliest in a century.

No cause has been determined, but speculation has centered on PG&E, which reported an outage around the time and place the fire ignited.

Late Thursday, California Public Utilities Commission President Michael Picker sought to calm financial markets by indicating support for the continued viability of PG&E and other publicly traded utilities.

In an interview with the San Francisco Chronicle, Picker said his agency will soon implement a provision in a new state law that makes it easier for utilities to pass costs for past wildfires to their customers. He said additional legislation may be needed to ensure that provision applies to this year’s fires.

“They have to be financially healthy to be able to provide those goods and services that ratepayers need,” he told the Chronicle. “If they can’t borrow money, if they have liquidity problems and they can’t do vegetation management, that’s a problem. That’s not good policy, to really let them get financially unstable.”

He also said he will widen an investigation of PG&E’s safety culture, which started following the regulator’s investigation of a 2010 gas pipeline explosion in San Bruno that killed eight people.

Even with Friday’s rebound, PG&E shares were trading about 50 percent lower than they were when the fire broke out.

Moody’s and S&P downgraded the credit ratings for the utility and its parent company late Thursday and warned that further downgrades were possible. Another downgrade would likely drop their debt below investment grade, making it significantly harder and costlier for the company to raise money to operate its sprawling network.

PG&E drew down its lines of credit on Tuesday, borrowing $3.3 billion in an unusual move that suggests the company is concerned about maintaining access to capital markets, Moody’s reported.

It’s unclear whether the Legislature and incoming Gov. Gavin Newsom will have the appetite to offer more help for PG&E after last year’s legislation was blasted as a bailout.

“The fires are still burning, bodies are still being recovered. As a state right now we are focused on supporting the victims and the recovery of these communities,” said Sen. Bill Dodd, a Napa Democrat who wrote the most recent legislation. “The facts aren’t in about the cause of these fires and it’s too soon to speculate about future legislation.”

Lynsey Paulo, a spokeswoman for PG&E, welcomed Picker’s comments.

“Access to affordable capital is critical to carrying out safety measures and meeting California’s bold clean energy goals,” she said in a statement. “Recently passed legislation recognized the importance of financially healthy utilities to California electric customers and implementing it quickly is important to achieve that goal.”

The company was hit with a second lawsuit from fire victims on Friday. Kirk Trostle, the former police chief of Chico and Oroville near the fire, and his wife, retired school principal Patty Garrison, accuse the company of mismanaging its power lines.

A PG&E spokesman said the company is aware of the lawsuit and safety is its highest priority.

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