Pacific Gas & Electric Co., which faces severe economic pressure among speculation, may have triggered a fatal northern Californian fire,…
Pacific Gas & Electric Co., which faces severe economic pressure among speculation, may have triggered a fatal northern Californian fire, US energy authorities asked last month for permission to raise their customers’ monthly bills.
The reason: to cure its system against fires and give a significant increase in profits to shareholders.
In an October application with the Federal Energy Regulatory Commission, Pacific Gas & Electric Co. out a series of dangers facing its transmission lines extending through northern California, saying that the system has a higher risk of fires than any other tool.
“Implications for PG & E’s exposure to potential liabilities associated with fires are increasing dramatically,” said filing. “To overcome the negative economic impact of any material damage that may ultimately be attributed to PG & E will require ongoing commitment to capital from investors.”
San Francisco-based PG & E ̵
1; one of the country’s largest power tools serving most of northern and central California – made a request a month before Camp Fire broke out on November 8 and quickly ballooned into the deadliest US fire on one century. No cause has been determined, but speculation has been centered on PG & E, which reported an interruption around when and where the fire was ignited.
Such speculation was anything but free. California state investigators in June failed PG & E-owned power lines to kick a dozen blazer in northern California in the fall of 2017 that killed 46 and burned nearly 9000 homes and other structures.
On Thursday, the authorities said the deaths from California’s Camp Fire had risen to 63, meaning the state covers 66. In addition, more than 600 people reportedly missing are missing, according to the Butte County Sheriff Office.  Enhanced Equities
PG & E’s potential responsibility for death and the huge property loss in Camp Fire will hit the company financially. The shares in the tool dropped as much as 32 percent on Thursday and are down almost 63 percent since November 8th. The company’s market value has decreased by $ 15 billion.
Company filing last month said it was necessary to increase revenue to keep investors from flying and note that its credit rating was downgraded and stocks had fallen since the 2017 fires.
Wildfires threatens PG & E’s ability to attract and retain the investment necessary to support its system and fulfill California’s clean energy goals, said company spokesman Lynsey Paulo.
“PG & E’s electrical system is not immune from the effect of increases in frequency and severity of extreme weather,” said Paulo.
Terray Sylvester / REUTERS
Local Government Administration in California Public Services (CPUC) Michael Picker tried to calm the financial markets late Thursday with a statement that “an important component of providing secure electrical services is financially for implementing security measures.” But he added that he expanded an investigation of PG & E’s security culture to look at the company’s corporate governance, structure and operations.
The PG & E shares recovered in the aftershore trade and resumed Thursday’s losses but remained far below their value when the fire
Height Comment analyst Clayton Allen wrote in a research note that regulatory authorities’ comments indicate that they will be a “constructive influence “including a comment from a CPUC official that” the Commission does not want PG & E (PCG) to go bankrupt. “
The company has $ 3.4 billion in liquid funds after pulling down its entire rotating credit facility , and it has an additional 1.4 billion dollars in fire protection insurance, according to an application. In a statement to CBS MoneyWatch, PG & E said that it lost its credit facility “to provide greater financial flexibility, including paying down future maturities and for public business purposes.”
An analyst at Citi Investment Research estimated damages could exceed $ 15 billion. And the company’s potential responsibility for last year’s fires has been linked by up to 10 billion dollars.
The company said in its price increase request that the extreme fire risk motivated a higher profit than an average benefit is allowed to earn. It refers to a statutory California that has tools that are completely responsible for damage caused by their equipment, whether the company was negligent.
A state team approved this year makes it easier for the company to raise interest rates to pay for trials, but the company says it is still facing high risk and has no relief for fires that started this year.
The depreciated decline in stock prices shows that investors not only take into account the fires but also the risk of future fires that the benefit can be responsible, analysts said.
“It will be very difficult for PG & E to fund their needs in the short term, so we believe that regulators now have to go in and give the market a certain assurance,” said Travis Miller, a strategist at Morningstar.
PG & E requests a 9.5 percent increase in transmission charges – the cost of high-voltage power lines over long distances. It amounts to about $ 1.50 a month for the average housing customer, said Paulo.
Advocates for beneficial customers have hit PG & E’s claim that it must raise prices due to fires. They say that the problems are the result of poor management decisions.
“We do not pay electricity bills to keep PG and E out of their own neglect and incompetence, and we can not afford it,” said Mindy Spatt, Communications Director for Utility Reform Network.
Some analysts believe that PG & E will be able to survive economically as long as there is no other major disaster. But wild fires are getting bigger, lethal and more destructive as housing presses into the countryside and drought and high temperatures associated with climate change become the norm.
“The company does not earn enough money to pay for it in a regular manner,” said Michael Wara, director of climate and energy policy at Stanford University. “These must be extreme once in a generation event.”
PG & E’s ability to raise capital will be limited, so it will probably be forced to reduce costs such as replacing aging equipment, analysts say. California tools must also invest in the type of upgrades that enable the state to meet its aggressive targets for renewable energy and carbon dioxide reduction.
Fire investigators have blamed PG & E equipment for 12 last year’s fires, including two that killed 15 people in combination. In eight of these fires, investigators said they found evidence of violation of state law and forwarded conclusions to prosecutors.
The company faces dozens of trials from insurers and people who lost their homes last year. And a trial this week, PG & E blames the latest fire and accuses the company of not effectively maintaining power lines.
California’s regulatory authorities generally allow tools to hand over the costs of these trials to their customers, but only if the company can show it cautiously handled its equipment. The new state act makes it easier for tools to bill customers if they can show that the fire is exacerbated by things beyond its control, such as difficult weather. But legislators did not release the standard that blames all the tools, which is unique to two states.
“Highly damaging the size of California’s tools is very rare in other states,” says Hugh Wynne of industry research and research.