Pacific Gas pays price for wildfire


Citing unnamed people familiar with the matter, Reuters reported that although a bankruptcy filing was not certain, preparations were being made. It's a unsafe game, though, as Monday's market reaction showed.

Earlier on Monday, PG&E shares dived more than 22 percent and its largest bond, a $3 billion note due in March 2034 with a coupon of 6.05 percent, fell to a record-low bid price of 91.5 cents on the dollar, while its yield rose to almost 7 percent. The bonds are now the most active in the investment-grade market. The utility is "currently reviewing and will respond" to the request.

The company's stock has lost 60 percent of its value in the past three months. Because of potential legislative aid, PG&E has not yet determined whether it will make a bankruptcy filing, Reuters reported.

The Camp Fire torched roughly 150,000 acres north of Sacramento in November.

Some analysts said the stock reaction may be overblown. California lawmakers have passed a law that would protect the company from the 2017 fire and fires in 2019 and after but not the 2018 fire. The state has yet to issue a report determining the cause of that blaze. The shares were down 22 per cent to US$19.04 at 2:28 p.m.

In November, California Assemblyman Chris Holden said a bill would be introduced in January to help PG&E absorb potential liabilities from the latest wildfires.

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And according to a new report by National Public Radio, Pacific Gas and Electric (PG&E), the parent company of California's largest utility, is exploring whether to sell off a major part of the company in order to cope with the cascading costs that continue to impact the energy company. The company could be engaged in similar brinkmanship now, he said.

Michael Wara, a lawyer and research fellow at Stanford's Woods Institute for the Environment, said he thinks the possibility of a murder charge for PG&E is "pretty unlikely". "Last year, they were able to fool the legislature with the narrative of bankruptcy or bailout, and the legislature gave them a bailout", said Hill. "We argue bankruptcy may be a substantive solution for several of PCG's woes, and should be considered a credible risk by shareholders".

Earlier on Friday, PG&E said in a statement that it's already weighing changes to both its board and how its businesses are structured.

There is also talk of PG&E selling off its natural gas assets.

"Finding something like that is better than not, but there's so much else going on that's its certainly not a decisive event", said Kit Konolige, a utility analyst at Bloomberg Intelligence. "It's possible, I suppose, but you'd have to prove intent in a way that is hard".