Fire victims camp out in Walmart parking lot

A Walmart parking lot in Chico, CA has become a makeshift shelter for victims of the Camp Fire.

Posted: Nov 15, 2018 5:15 PM
Updated: Nov 15, 2018 5:39 PM

Shares of California electric utility PG&E plunged again Thursday to their lowest level in more than 15 years as concerns mount about potential liabilities tied to the massive Camp Fire.

PG&E (PCG) was down 30% in late afternoon trading. The stock has now plummeted more than 60% since the wildfires began the morning of November 8.

The death toll has risen to 56 people. More than 8,500 homes have been destroyed, And the fire is still not completely under control.

The cause of the fire has yet to be determined. But investors are clearly worried about the possible legal risks.

PG&E disclosed in a regulatory filing Tuesday that it "experienced an outage" on a transmission line in Butte County at 6:15 a.m. on November 8 -- just 15 minutes before the Camp Fire broke out.

PG&E added that if its equipment is found to be responsible for the fire, PG&E "could be subject to significant liability in excess of insurance coverage" and that this could have "a material impact" on its financial results.

The utility renewed its liability insurance coverage for wildfire events for an amount of approximately $1.4 billion that covers the period from August 1, 2018 through July 31, 2019, the company said in the SEC filing.

But the estimated damages are rising rapidly. Moody's said earlier this week that it could cost up to $6.8 billion, while Citigroup estimates the damages could be as high as $15 billion.

PG&E may not have enough to cover this cost, let alone any legal fees or fines it might have to pay.

The utility's total market value is now below $10 billion, and PG&E said in its filing that it currently has just $3.46 billion in cash after borrowing from an existing revolving credit line.

So it could need another bailout from the state of California if it's found to be liable for the Camp Fire.

Governor Jerry Brown signed a bill in September that lets PG&E issue bonds backed by surcharges from the utility's customers. Those bonds will help pay for damages tied to deadly California wildfires in October 2017 caused by faulty PG&E equipment.

The bill allows for the possibility that utilities could issue similar bonds for future fires, but that is not guaranteed.

PG&E already faces one lawsuit related to the Camp Fire. A group of law firms that has dubbed itself the Northern California Fire Lawyers filed a suit Tuesday on behalf of Camp Fire survivors.

The firms allege in the suit that "PG&E was negligent in failing to maintain its infrastructure and properly inspect and manage its power transmission lines."

A spokesperson for PG&E told CNN Business on Wednesday that "it's important to remember that the cause has yet to be determined."

"We are aware of lawsuits regarding the Camp Fire. Right now, our primary focus is on the communities, supporting first responders and getting our crews positioned and ready to respond when we get access, so that we can safely restore gas and electricity to our customers," the spokesperson added.

Another PG&E spokesperson said Thursday that the company had no comment about the continued slide in the stock price.

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