PG&E posts $1 billion loss as debate rages over wildfire claims
PG&E posts $1 billion loss as debate rages over wildfire claims
26 July 2018
Published by https://www.sacbee.com/
USA – PG&E Corp. announced a loss of nearly $1 billion due to wildfire claims Thursday — and repeated its demands that the Legislature take steps to reduce the utility’s liability for future fires.
One day after Gov. Jerry Brown released a proposal that would ease California utilities’ wildfire losses, the parent of Pacific Gas and Electric Co. reported that it lost $984 million during the second quarter as it anticipates an avalanche of claims from last fall’s deadly wine country fires.
The utility’s chief executive, Geisha Williams, immediately pounced on the huge loss as evidence that the Legislature must act. Current law “is unsustainable and is already having very real consequences,” she said on a conference call with investment analysts.
She added that the governor’s proposal, while welcome, “is insufficient” and she wants the Legislature to do more to shield PG&E and other utilities from wildfire claims. “A lot more work is necessary,” she said. “It doesn’t go far enough.”
Current law says a utility can be held liable for fire damages caused by its poles, wires and other equipment, even if the company followed state safety rules. Brown’s plan would require courts “to determine whether the utility acted reasonably.” Brown’s plan wouldn’t cover any losses from 2017.
Williams, though, complained that Brown’s plan falls short by not “addressing the 2017 wildfire costs in the most cost-effective manner possible.” She didn’t provide detail on how she wants the costs of last year’s fire handled.
The wine country fires have loomed as a financial disaster for PG&E. State insurance officials have said the costs could exceed $10 billion, and Williams has previously hinted that the company could be forced into bankruptcy. Cal Fire has determined that PG&E equipment was responsible for at least 12 of last fall’s fires and hasn’t yet issued a report on the Tubbs Fire, the deadliest of the blazes.
PG&E has been lobbying the Legislature and Brown’s office for months on the issue, arguing that climate change makes massive wildfires almost inevitable in the years to come. Although the utility has embarked on a more aggressive wildfire-preparedness plan, Williams said the fires currently raging in California are proof that “we’re experiencing that new normal now.”
The loss PG&E announced Thursday was predictable. In June PG&E announced it was taking a $2.5 billion pre-tax “reserve” to account for anticipated losses from last October’s wine country fires, which were the deadliest and costliest in California history. After taxes were factored in, the utility wound up with a $984 million loss for the quarter.
PG&E critics, including some legislators and the insurance industry, have vowed to fight major changes to the liability laws. A coalition of insurance companies issued a statement Wednesday calling Brown’s proposal “nothing more than a utility bailout” that shifts utilities’ liabilities “onto the backs of wildfire survivors, homeowners, communities and businesses.”
