PG&E Expects a $1.15 Billion Loss From the Dixie Fire
(Bloomberg) -- PG&E Corp., the California utility giant driven into bankruptcy after its equipment caused deadly blazes, said federal prosecutors are investigating its role in a massive fire this summer and expects to incur a $1.15 billion loss from the inferno.
The Dixie Fire, which is suspected to have been sparked when tree fell on a PG&E power line, became the second-largest wildfire in California history, torching nearly 1 million acres in the northern Sierra mountain range. The blaze destroyed about 1,300 structures, leveled most of the gold-rush era town of Greenville and killed one person.
The loss estimate is based on expected damage claims by property owners, business losses and the fire’s impact on private timber operations, PG&E executives said during a conference call Monday. The utility emerged from bankruptcy protection last year.
The company also received a subpoena from the U.S. attorney’s office for the Eastern District of California in connection with the blaze, according to a filing. PG&E shares fell 2.5% to $11.31 at 2:07 p.m. in New York and have declined 9.2% this year. The bonds fell, too, with 4.95% senior notes maturing in 2050 falling 0.731 cents on the dollar to 110.356 cents at 3:46 p.m., according to Trace data.
The impending loss and federal probe are the latest blows for embattled PG&E. The company incurred a $1.09 billion third-quarter loss because of bankruptcy costs, state-mandated contributions to a wildfire-insurance fund, prior fire-season damages and other costs, according to a statement.
Adjusting for those extraordinary costs, profit rose to 24 cents a share from 22 cents a year earlier, according to a statement. The result was 2 cents shy of the average estimate from analysts.
Five county district attorneys are also investigating the company’s role in the Dixie Fire. In addition, a federal judge overseeing the company’s criminal probation is looking into its initial response to the start of the blaze in a canyon north of Sacramento.
PG&E expects to recover costs of the fire from insurance, customer rates and a fund established by the state, it said in the filing. The loss estimate excludes potential claims for fire-fighting costs from federal, state and local agencies. More than $630 million of costs had been incurred in suppressing the Dixie fire, according to a National Interagency Coordination Center Incident Management Situation report, the company said.
PG&E CEO Patricia Poppe said the company is confident that they will be found to have acted prudently in respect to the Dixie fire, allowing the utility to recover costs under state rules.
“Our actions around Dixie were those of a reasonable operator,” Poppe said during the investor call.
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