PG&E stock plummets after report it's eyeing bankruptcy filing

Gladys Abbott
January 8, 2019

Pacific Gas & Electric is preparing to take a significant charge for liabilities related to the wildfires of 2018 and 2017.

In weighing a bankruptcy filing, PG&E Corp. officials - whether intentionally or not - are putting the pressure on California legislators to bail them out. They'll have to decide whether to allow the company to pass some of the costs of the fire through to taxpayers, Katie Bays and Clayton Allen, analysts at Height Securities LLC, said in a note on Monday.

But that is just a possibility, according to sources contacted by Reuters.

A bankruptcy filing is not PG&E's preference for addressing liabilities from the catastrophic blazes, some of the sources said.

The utility is considering the move for some or all of its businesses, Reuters reported on Friday.

PG&E, whose shares have lost almost half of their value since the wildfire, said it is working with a leading search firm to identify new directors and is interviewing several candidates.

State Senator Jerry Hill, an outspoken PG&E critic, said the utility previously raised bankruptcy as leverage when seeking state assistance in paying its liabilities from wildfires in 2017.

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Several Camp Fire survivors have also already filed lawsuits against PG&E.

The utility has been wrestling with how best to proceed after two years of destructive fires.

The utility, California's largest, is contending with potentially crippling liability costs related to California's Camp Fire.

Filing for bankruptcy would shield PG&E from the liabilities, giving it time to figure out how to handle the claims. Lawmakers were in talks late a year ago for legislation to protect the company from liabilities related to the 2018 fires.

The company said on Friday that it was reviewing its "structural options" and assessing its operations, finances, management, structure and governance. It is searching for new directors at its holding company and its utility unit Pacific Gas and Electric Co.

The ratings agency said it could further cut the company's rating over the next few months if explicit steps are not taken by authorities to improve the regulatory situation, signaling that the agency may be losing faith that lawmakers could rescue PG&E.

PG&E also filed for bankruptcy in 2001 during California's energy crisis. It emerged from bankruptcy in 2004.

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