California utility giants rise amid fire bill proposal

Bloomberg

Shares of California utility owners PG&E Corp, Edison International and Sempra Energy climbed after Governor Jerry Brown indicated that utilities shouldn’t be responsible for future wildfire damages without considering whether they acted “reasonably.”
The proposal wouldn’t affect the billions of dollars in potential liabilities PG&E and Edison face for blazes in 2017, Brown said. But it’s a win for PG&E, which has been lobbying hard to change state policies that currently hold utilities responsible for the costs of wildfires that their equipment ignite, even if they weren’t negligent.
California investigators have already named PG&E equipment as the ignition source of 16 of the swarm of fires that swept Northern Californian region starting in October, destroying thousands of homes and killing 44 people. The probes alleged violations of state law in 11 of those incidents. PG&E said in June that it will take a $2.5 billion pretax charge tied to some of those blazes. The San Francisco-based utility owner could be on the hook for billions more. Its shares have fallen 39 percent since mid-October.
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 — based on a legal principle known as “inverse condemnation.”
“The fact that the governor is coming out reiterating specific support for doing something to fix inverse condemnation is being seen as significant,” said Kit Konolige, an analyst at Bloomberg Intelligence in New York. “It’s good news in the sense that it’s a data point that says, ‘Hey, something’s going on. The governor seemingly in discussions with legislators is talking about pushing ahead with it.’ But it’s not a done deal. It ain’t over ‘til it’s over.”
“We look forward to reviewing the governor’s statement and the upcoming work of the joint conference committee,” Lynsey Paulo, a PG&E spokeswoman, said in an emailed statement.
“As we have stated previously, we believe comprehensive public policy reforms are urgently needed to address the challenges brought about by more frequent and more intense wildfires.”