PG&E Reports $1.6 Billion Loss as Fires, Blackouts Raise Costs
By Katherine Blunt and Micah Maidenberg
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
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 midmorning trading
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
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
Write to Katherine Blunt at Katherine.Blunt@wsj.com and Micah
Maidenberg at email@example.com
(END) Dow Jones Newswires
November 07, 2019 11:35 ET (16:35 GMT)
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