PG&E shares plunge on bankruptcy worries

Jeannie Matthews
January 8, 2019

Former PG&E employees who spoke with NPR on the condition of anonymity said that the company was considering selling its natural gas division in order to avoid bankruptcy as it works to cover liability costs.

California utility company PG&E Corp is exploring filing some or all of its business for bankruptcy protection as it faces billions of dollars in liabilities related to fatal wildfires in 2018 and 2017, people familiar with the matter said on Friday.

The brief was filed after U.S. District Court Judge William Alsup requested officials determine what crimes PG&E may have committed if it was found responsible for the fires.

The parent company of California's largest utility said Friday it is assessing its finances and structure in its effort to confront a growing liability threat from wildfires blamed on the company. PG&E stock rose 1.9% Friday in regular trading, as the S&P 500 index rose 3.4%.

The potential for bankruptcy may pressure lawmakers to decide on whether to allow the company to pass some of the costs of the fire through to taxpayers, Katie Bays and Clayton Allen, analysts at Height Securities LLC said in a note on Monday.

The Camp Fire broke out on the morning of November 8 near the mountain community of Paradise, sweeping through the town and killing at least 86 people, in the deadliest and most destructive wildfire in state history. Given the historical timeline for wildfire investigations, Ford expects a report on the Tubbs fire in the next few weeks.

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In November, California Assemblyman Chris Holden said a bill would be introduced in January to help PG&E absorb potential liabilities from the latest wildfires. "We argue bankruptcy may be a substantive solution for several of PCG's woes, and should be considered a credible risk by shareholders". As part of the bill, PG&E will be able to issue bonds backed by surcharges from its customers.

PG&E also filed for bankruptcy in 2001 during California's energy crisis.

The utility said on Friday it is also looking for new directors for its holding company and its unit Pacific Gas and Electric Co. But they added that "exploitive tactics and a reticence toward change will not improve" the company's profile.

The company said it has formed a special board committee that includes independent experts to advise on wildfire safety best practices.

But that is just a possibility, according to sources contacted by Reuters. "We recognize the need to balance the interests of many stakeholders while maintaining safe, reliable, and affordable services for our customers, which is always our top priority".

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