PG&E tanks as $18bn in fire claims return to haunt utility

Bloomberg

Fallout from a deadly wildfire that swept across Northern California in 2017 and pushed PG&E Corp. towards bankruptcy has returned to once again haunt the utility giant, pummeling its shares.
A US Bankruptcy judge lifted a freeze on $18 billion in legal claims tied to the blaze, which killed 22. While state investigators cleared PG&E of responsibility for the Tubbs fire seven months ago, victims and insurers have disputed those findings, saying they have evidence indicating it was started by PG&E equipment. Now a citizen jury may decide at a time when the utility has been struggling to regain public trust.
“It was a little out of left field that the judge allowed the Tubbs fire litigation to go to an outside jury,” Kit Konolige, a Bloomberg Intelligence analyst, said in an interview. “That’s a big negative surprise.”
The ruling by US Bankruptcy Judge Dennis Montali is the latest bad news for PG&E, which already faces liabilities from a separate deadly fire in 2018 that investigators did blame on its equipment. Last week, a court-appointed compliance monitor said PG&E failed to properly trim trees in blaze-prone zones. And a judge forced the company to respond to a media report that PG&E deferred maintenance on equipment near the ignition point of the 2018 Camp Fire, which killed 86 people.
Citigroup Inc. downgraded PG&E’s stock to “sell” and slashed its price target to $4 from $33, noting that claims from the 2017 Tubbs Fire, which destroyed more than 5,600 structures, could balloon liabilities. The original estimate was $1 billion to $2 billion.
PG&E has outlined its plan to exit the biggest utility bankruptcy in US history, promising to largely protect the value of its shares. The company says it plans to file the proposal by
September 9.
Days before the company filed for bankruptcy, California fire officials said the utility didn’t cause the 2017 Tubbs fire.
Instead, investigators ruled it was sparked by a private electrical system outside a home near Calistoga. Attorneys for the victims and insurers, though, continued to push for their claims to be considered by a jury. The lawyers also say that PG&E failed to cut power to the area despite the high fire risk.
Under California law, the Tubbs victims will get a trial within five months, Mike Danko, a lawyer representing fire victims said in an email.
PG&E also faces liabilities from the deadly 2018 Camp Fire, which destroyed the town of Paradise. Investigators ruled in May that it was ignited by the utility’s power lines. It was the deadliest blaze in California history.
PG&E’s 6.05% bonds due March 2034 fell 3 cents on the dollar to 108.25 Monday, the biggest decline since January, data compiled by Bloomberg show.