PCG PG&E Corporation

By Katherine Blunt, Russell Gold and Kimberly Chin 

Shares of PG&E Corp. opened sharply higher Friday on investor hopes that California officials would move to rescue the utility from potential wildfire-related liabilities that threaten to plunge it into bankruptcy.

California's energy regulator late Thursday pledged a review of the company, including exploring a breakup of the state's largest utility, expanding an existing probe into its safety practices.

But he also indicated an openness to let the company pass on some wildfire-related lawsuit costs to its customers, a signal that sparked a rally in the company's shares after days of declines.

Michael Picker, president of the California Public Utilities Commission, said Thursday in an interview with The Wall Street Journal that "in general, we try to make sure that all utilities have the economic strength and wherewithal to procure the goods and services that Californians need."

He said that he preferred that PG&E not enter into bankruptcy because it could raise its cost of borrowing, which could end up raising energy costs for its customers. "It is generally not good policy for utilities to go into bankruptcy," he said.

Shares in PG&E surged more than 40 percent to open at $25.20, erasing Thursday's steep losses. The share price had fallen for six consecutive days on concerns that the utility, already facing billions of dollars in potential liability costs from 2017 wildfires, could face even higher costs related to the Camp Fire in Northern California that has killed more than 60 people.

California lawmakers earlier this year passed legislation allowing utilities to securitize wildfire-related liabilities such as lawsuit costs by issuing bonds that would be paid off by their customers. But while the measure provided a path to do this for last year's fires, and fires starting next year, by seeking approval from the Public Utilities Commission, it is unclear whether it could be applied to this year's fires.

Mr. Picker said Thursday that attorneys with the commission have told him it could be applied to 2018 fires, but that the question could be resolved later, since it would likely take many months in any case for findings of fault and damages in the fires to become clear.

If it cannot, California lawmakers might have to act to revise the legislation. Thus far, they have said little about whether they would address the issue, and it looks likely to linger into next year.

PG&E spokeswoman Lynsey Paulo said in a statement on Thursday evening that "we agree with CPUC President Picker's statement that an essential component of providing safe electrical service is long-term financial stability. Access to affordable capital is critical to carrying out safety measures and meeting California's bold clean-energy goals."

The utility disclosed late last week that a problem occurred on one of its high-voltage power lines in Northern California 15 minutes before the start of the Camp Fire was reported in the area Nov. 8. No definitive connection between the line outage and the fire has been made, and California fire investigators will likely take months to make a final determination.

PG&E has stressed that the cause of the fire has not been determined.

Both Moody's Investors Service and S&P Global ratings on Thursday downgraded their ratings on PG&E Corp.'s debt, as well as that of its subsidiary, Pacific Gas & Electric Co.

Write to Russell Gold at russell.gold@wsj.com, Katherine Blunt at katherine.blunt@wsj.com and Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

November 16, 2018 11:38 ET (16:38 GMT)

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