Tuesday, September 28, 2021

PG&E warns of potential financial losses from Dixie Fire

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The disclosures were contained in a quarterly report that PG&E and its utility subsidiary Pacific Gas & Electric Co. issued on Thursday in connection with the company’s second-quarter financial results that covered the April through June period of 2021. San Francisco-based PG&E also warned on Thursday that it might be forced to confront a “material impact” if it doesn’t have sufficient insurance to cover potential costs connected to the Dixie blaze that continues to roar through Butte County and Plumas County in the rugged and remote Feather River Canyon region.

However, it’s too soon to precisely sketch out the financial woes the company might be facing, the SEC filing stated.

“PG&E Corp. and the utility believe it is probable that they will incur a loss in connection with the 2021 Dixie fire,” the company stated in a filing with the Securities and Exchange Commission.

“Due to the limited amount of time that has elapsed since the start of the 2021 Dixie fire, the preliminary stages of the investigations, and the uncertainty as to the extent and magnitude of possible losses, PG&E cannot reasonably estimate the amount or range of such possible loss at this time,” the company said in the SEC documents.

Liabilities linked to a string of blazes in Amador County and Calaveras County in 2015, the North Bay Wine Country in 2017, and Butte County in 2018 were major factors that caused PG&E’s finances to buckle and force the company into bankruptcy in 2019.

Now, PG&E in the regulatory filing rattled off a string of incidents that could cause fresh financial pressures to jolt the utility.

The 2019 Kincade Fire in Sonoma County, the 2020 Zogg Fire in Shasta County and Tehama County, and the current 2021 Dixie Fire all have connections to PG&E’s equipment as their respective causes.

Some of the utility’s financial difficulties could ease if PG&E were to tap a wildfire fund established by AB 1054 that is available for electric utility companies. The wildfire fund can enable payment of claims for liabilities arising from wildfires that are caused by the utility’s electricity equipment.

“While the cause of the 2021 Dixie fire remains under investigation and there are a number of unknown facts surrounding the cause of the 2021 Dixie fire, the utility could be subject to significant liability in connection with this fire,” PG&E stated in the regulatory filing.

It’s unclear whether PG&E’s insurance is sufficient to cover all of the potential liabilities linked to the Dixie Fire, the utility noted.

“If such liability were to exceed insurance coverage, it could have a material impact on PG&E’s and the utility’s financial condition, results of operations, liquidity, and cash flows,” PG&E stated in the SEC filing on Thursday.

 

 

 

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