Pacific Gas and Electric (NYSE:PCG)
Historical Stock Chart
3 Months : From Oct 2019 to Jan 2020
By Katherine Blunt and Micah Maidenberg
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 8, 2019).
PG&E Corp. reported a $1.6 billion third-quarter loss as the costs of wildfires, bankruptcy and blackouts weighed on the beleaguered California utility.
The San Francisco-based company on Thursday also recorded $2.5 billion in new pretax charges related to the claims it faces following a series of deadly wildfires in 2017 and 2018 that California investigators have linked to its equipment. That raises the total charges the company has taken from the fires to $20.4 billion.
The charges reflect a tentative $11 billion settlement that PG&E, the parent of Pacific Gas & Electric Co., reached in September to compensate insurance companies that covered fire-related losses. The company is still working to reach a settlement with individual victims of those fires and has proposed establishing an $8.4 billion trust fund to pay claims.
Shares in the company fell more than 10% in afternoon trading on Thursday.
PG&E sought chapter 11 bankruptcy protection in January, citing more than $30 billion in potential liability costs. Its equipment was determined to have sparked 19 wildfires in 2017 and 2018 that collectively killed more than 100 people.
"We continue to make progress in our efforts to move expeditiously through the chapter 11 process, and remain focused on a fair and prompt resolution of wildfire victims' claims," said Chief Executive Bill Johnson.
PG&E said it expects to incur as much as $6.3 billion in after-tax costs related to wildfires, the bankruptcy proceeding and a massive effort to shore up the safety of its electric grid, which serves 16 million people in Central and Northern California.
The company has this year spent hundreds of millions of dollars on legal services, as well as a monthslong blitz to trim trees and accelerate equipment inspections.
It posted a third-quarter loss of $1.6 billion, or $3.06 a share, compared with earnings of $564 million, or $1.09 a share, during the same quarter last year.
The disclosures come as PG&E struggles to ensure the safety of its electric system during wildfire season. In recent weeks, the company has pre-emptively shut off power to millions of Californians for days at a time in an effort to prevent its equipment from sparking more destructive wildfires.
The shut-offs created havoc and angered customers, businesses and state officials. The company anticipates $90 million in pretax costs to provide a one-time bill credit to customers affected by its first sweeping shut-off last month.
PG&E recently disclosed that one of its transmission lines may have sparked the Kincade Fire in Sonoma County, despite having turned off a large section of the power grid there, as well as a series of smaller fires in the Bay Area.
The company said Thursday that it is "reasonably possible" that it will incur a loss related to the Kincade Fire, which destroyed 374 structures, including 174 homes, but noted that the investigation is preliminary.
News that PG&E equipment may be linked to some of last month's fires sunk the company's stock and bond prices, and threatened to stall negotiations among investors in bankruptcy court. The company's shareholders and bondholders have proposed competing plans to restructure the utility, pay creditors and exit bankruptcy.
Gov. Gavin Newsom last week threatened a state takeover of the company if its investors can't quickly agree on a restructuring plan. He met with company executives and other stakeholders this week in an effort to speed the process.
PG&E hasn't provided earnings guidance for the remainder of 2019, citing uncertainty related to the bankruptcy case and other matters.
Write to Katherine Blunt at Katherine.Blunt@wsj.com and Micah Maidenberg at email@example.com
(END) Dow Jones Newswires
November 08, 2019 02:47 ET (07:47 GMT)
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