PG&E Corp. rose after a California lawmaker requested a bill to help the state’s largest utility absorb liabilities from this year’s fatal wildfires.
Kellie Smith, an adviser to assemblyman Chris Holden, said she is drafting legislation that could be introduced as early as Dec. 3. It may serve as a framework for lawmakers to consider relief for PG&E from the billions of dollars it faces in potential liability for death and property damage in Northern California’s Camp Fire, the deadliest in state history.
“He is concerned about the instability of the utility and the adverse effect it could have on ratepayers and the ability to deliver services at a reasonable cost,” Smith said by telephone Monday.
Holden, who helped shepherd a bill that passed earlier this year to help California utilities cope with wildfire costs, was out of the country and unavailable for comment on the pending legislation. Other proposals may also emerge, and Michael Picker, president of the agency that regulates the giant utility, has publicly raised the possibility it may consider breaking up the company.
PG&E shares gained as much as 4.9 percent Tuesday. They have plunged by more than half since the Camp Fire broke out on Nov. 8.
Guggenheim analyst Shahriar Pourreza said in a note Tuesday that the “inclination of a relief bill potentially forming is a step in the right direction.” Citigroup Inc. analyst Praful Mehta said the measure could pass early next year.
The blaze, about 150 miles (240 kilometers) northeast of San Francisco, has consumed about 151,000 acres, destroyed thousands of homes and commercial buildings and killed at least 79 people, with about 700 missing. Damages may exceed $15 billion, according to Citigroup Inc. The fire was 70 percent contained as of late Monday, according to the California Department of Forestry and Fire Protection.
Northern California is forecast to get as much as 7 inches (18 centimeters) of rain this week, which will help tamp down the blaze and clear smoke that’s been poisoning air across Northern California. But the showers may also trigger floods and mudslides.
In response to deadly fires in 2017, lawmakers approved a legislative package that allows PG&E to sell bonds backed by customers to cover liabilities. It also gave utilities a mechanism for recovering some wildfire costs starting next year, so long as the fires weren’t caused by company negligence. There were no provisions for 2018 blazes.
That package came out of a special committee convened by Governor Jerry Brown and legislative leaders of both houses to address wildfires and utilities. Under California law, utilities can be held liable for costs if their equipment is found to have caused a fire – regardless of whether they followed safety rules.
Brown had pushed a proposal that would have given utilities relief from the rule, which was opposed by insurance companies, trial lawyers and fire victims. Holden was named as the co-chairman of the committee that held hearings on the matter and ultimately didn’t act on that provision.
Smith said Holden’s new bill may likely extend the securitization provisions of that legislation, known as SB901, to 2018.
Bloomberg News had previously reported that California policy makers are informally weighing legislation that would let PG&E sell bonds to cover any possible liabilities.
“There will be a time and a place for all this, but right now, we are solely focused on helping the first responders and helping our customers recover and rebuild,” said Lynsey Paulo, a spokeswoman for San Francisco-based PG&E.
It’s likely that any formal state action wouldn’t occur until 2019. A bill must be in print in 30 days before it moves through the legislative process. Consideration of the bill could be expedited, but requires a two-thirds vote of the legislature to do so. The legislature is only scheduled to be in session one day in December, the 3rd.
Ali Bay, a spokeswoman for Brown, said the office doesn’t comment on pending legislation.
PG&E already faces as much as $17.3 billion in potential liabilities for wildfires in 2017, according to JPMorgan Chase & Co., bringing its total potential liability from blazes above $30 billion.
While Picker on Friday said the California Public Utilities Commission will examine whether PG&E would be better off broken up, he stressed he does not want to drive the company into bankruptcy. Any changes, he said, would need to be made carefully.
“This is like rebuilding the plane while it’s still in flight – you don’t want to crash the plane while you’re trying to make it safer,” Picker said.
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