Wildfire Costs Jolt PG&E with Huge Loss, CEO Calls Brown Fire Plan "Insufficient"
By George Avalos
SAN FRANCISCO — PG&E on Thursday revealed its latest accounting of the staggering expense of last fall’s North Bay wildfires, saying that $1.59 billion in costs drove a $984 million net loss for the utility in the second quarter.
The charge PG&E took in the second quarter alone for Northern California wildfire-related costs nearly equaled the company’s $1.6 million penalty in 2015 for a natural gas explosion that killed eight and wrecked a San Bruno neighborhood in 2010. That was the largest regulatory punishment ever imposed on a U.S. utility, and the company was later found guilty of crimes it committed before and after that explosion, a verdict that branded PG&E a convicted felon.
San Francisco-based PG&E attributed the $1.59 billion in new wildfire costs to cleanup, repair, legal fees and claims from third parties against the utility related to the fire. But even those costs pale next to the additional billions in liability the utility faces over the fires — an issue that has tanked the company’s stock in recent months and that dominated a conference call with company executives following its Thursday earnings report.
In recent months, PG&E has been waging a campaign to change the state’s legal framework for determining whether utilities and their shareholders — or the companies’ rate-paying customers — ultimately pay for costs associated with wildfires sparked by the utilities’ infrastructure. A state legislative committee is considering various proposals, including one from Gov. Jerry Brown that would ease utilities’ future potential wildfire-related liabilities, but wouldn’t apply to the October 2017 Wine Country fires.
Consumer advocates this week branded Brown’s proposal a giveaway to the utilities, but PG&E took an opposite stance Thursday, saying it is “insufficient.” The company has previously said the potential liabilities from the Wine Country fires — estimates of losses have topped $9 billion — threaten it with financial ruin.
PG&E told analysts during the conference call that it may have to slash spending on maintenance, equipment and clean energy unless it receives more favorable outcomes from Sacramento. PG&E also said insurance premiums and its costs have jumped in the aftermath of the wildfires.