PG&E Wildfire Woes Are Also Hurting California's Other Utilities
(Bloomberg) -- As utility giant PG&E Corp. heads closer to a planned bankruptcy filing at the end of the month, the state’s other utilities are getting caught in some of the downdraft.
While neither Edison International, which operates the state’s largest investor-owned electric utility in the southern part of the state, nor Sempra Energy, which owns San Diego Gas & Electric, are at risk of bankruptcy, both are underperforming other U.S. utilities.
Edison is feeling most of the pain. It was downgraded to “underperform” this week from “neutral” by Bank of America Merrill Lynch, which cited the challenging environment in the Golden State and the open-ended nature of the wildfire liability risk that has sent PG&E to the brink of a Chapter 11 filing.
“The accelerated timeline of the PG&E bankruptcy emphasizes the lack of confidence from investors in the underlying California utility construct,” Julien Dumoulin-Smith, the analyst, wrote in a note, though he called Edison’s management “diligent operators.”
Edison’s shares have dropped 8.7 percent so far this week, compared with 0.7 percent for the S&P 500 Utilities Index -- though both are a far cry from PG&E’s 60 percent plunge. Edison is still being investigated for its role in two large Southern California wildfires in 2017 and 2018, including last year’s Woolsey blaze, which burned parts of Malibu.
“The wildfires have caused numerous deaths and destroyed thousands of structures, and may also pose a huge financial threat to utilities PG&E and Edison International,” Kit Konolige, senior utilities analyst with Bloomberg Intelligence, said in a note Wednesday.
Edison said in a statement that “the tragic consequences of wildfires have impacted the entire state” and the utility owner “remains committed to providing its customers with safe, reliable, affordable and clean power.” The company is able to manage its financial wildfire liabilities and continues to invest in hardening its grid and other programs, it said.
Meanwhile, Sempra Energy has mostly bucked the trend -- at least so far. It was down 1.2 percent for the week on Wednesday, more in line with the utility index. And Sempra, which owns other energy business units in addition to SDG&E, is now set to replace PG&E in the Dow Jones Utility Average.
SDG&E “has invested more than $1 billion in robust programs and technologies to protect our communities from wildfires, including a state-of-art weather-monitoring network, a system of mountaintop wildfire detection cameras, and an aggressive program to replace wooden power poles with steel poles,” according to a statement from Sempra late Wednesday.
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