PG&E `Wishfully Thinking' It Can Toss Key Claim Over Wildfires

(Bloomberg) -- PG&E Corp.’s request for early release from a key legal claim over the most destructive wildfire in California history is wishful thinking, according to analysts and legal experts.

Officials haven’t determined the causes of the Tubbs Fire and a series of other blazes that burned through wine country north of San Francisco last year, but analysts have said the utility could face more than $15 billion in claims from the fires.

Anyone who thinks PG&E “will be absolved from liabilities this early in the process is likely wishfully thinking,” Guggenheim securities analysts wrote in a research note this week. Any ruling that comes out of a hearing set for Friday in state court in San Francisco will probably be appealed, they said.

In Congress, California’s legislature and courts, PG&E is challenging a state law allowing private property owners to hold the utility 100 percent responsible for any losses caused by its equipment or power lines even if it didn’t act negligently.

The principle of inverse condemnation in the state constitution is premised on spreading losses, or an ability to “socialize the burden” from massive damage to individuals and public good through taxes, PG&E argues. The company argues the law doesn’t apply to private companies like PG&E, which don’t have the authority to tax and can only raise rates approved by the California Public Utilities Commission.

CPUC Decision

PG&E points to a November decision by the CPUC denying a request by Sempra Energy’s San Diego Gas & Electric to recoup costs from inverse condemnation. The commission found in that case that SDG&E didn’t adequately manage its facilities leading up to deadly wildfires a decade ago.

Some legal experts say the CPUC decision in that one case doesn’t mean cost recovery for utilities will be automatically denied in others.

The utility may have to fight all the way to the state’s highest court to break new ground in the law, said Michael Reiter, who has represented both victims and defendants in similar lawsuits.

“In the long run, this is a good move by PG&E, but it seems unlikely that they will win this argument, at this stage of the proceedings,” Reiter said.

The case is California North Bay Fire Cases, JCCP No. 4955, California Superior Court, San Francisco County.

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