Fire-Swept California Cites New Investor Risk: Its Energy Grid
(Bloomberg) -- As firefighters grapple with two of the state’s biggest wildfires, California said stress to its electricity system sparked by events such as fires poses a risk to investors.
In documents circulated to potential buyers of its $2.1 billion general-obligation deal on Sept. 14, the state added the threat to its list of dangers they should consider.
“The future fiscal impact of stresses to the energy grid caused by climate is difficult to predict, but could be significant,” the state said. “In recent years, California has taken on numerous steps to increase resiliency to be better prepared to meet the state’s electricity demands.”
The addition underscores the increasing threat of climate-induced events for state and local governments. The Northeast is grappling with fatal floods and New Orleans is restoring its power grid after a hurricane.
In the bond documents, California listed 11 risks. It also added the threat of inflation, which wasn’t included when it sold general-obligation debt in April, and removed the risks of the sufficiency of federal aid, federal census and population projections. The current risks are:
- Covid-19 pandemic
- Threat of recession
- Capital gains volatility
- Global relations and trade
- Health care costs
- Housing constraints
- Debts and liabilities
- Climate change
- Energy Risks
- Cybersecurity risks
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