There still hasn’t been an official determination as to what caused the Camp Fire in northern California last week, but an attorney for a group of people who have sued Pacific Gas & Electric said today that his experts have gathered information that suggests the utility company is at fault. From Yahoo News:
As of Thursday morning, the Northern California’s Camp Fire had taken the lives of 56 people, and it had burned nearly 140,000 acres — including 8,000 homes and 260 businesses.
A lawyer who filed suit against PG&E on behalf of one of the early plaintiffs said his experts are helping him to understand what caused the fire.
“We have received enough information that leads us to believe that PG&E is responsible for the Camp Fire,” John Fiske of the law firm Baron & Budd said.
PG&E’s stock has dropped 60% in the past week as investors became worried it could eventually be forced into bankruptcy if found responsible for the fire. A recent PG&E filing with the SEC made note of the risk: “While the cause of the Camp Fire is still under investigation, if the Utility’s equipment is determined to be the cause, the Utility could be subject to significant liability in excess of insurance coverage that would be expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.”
That’s putting it mildly. CNN Business reports the estimates of the damage from the fire reach as high as $15 billion, more than the company’s total value after the stock drop:
The utility renewed its liability insurance coverage for wildfire events for an amount of approximately $1.4 billion that covers the period from August 1, 2018 through July 31, 2019, the company said in the SEC filing.
But the estimated damages are rising rapidly. Moody’s said earlier this week that it could cost up to $6.8 billion, while Citigroup estimates the damages could be as high as $15 billion.
PG&E may not have enough to cover this cost, let alone any legal fees or fines it might have to pay.
The utility’s total market value is now below $10 billion, and PG&E said in its filing that it currently has just $3.46 billion in cash after borrowing from an existing revolving credit line.
The one hope for PG&E, if it is found responsible for the fire, is a bond sale which it would pay back with surcharges on customers. In fact, California’s Jerry Brown just signed a law allowing PG&E to do that as a way to cover its liability for fires it was found responsible for in 2017. From Yahoo News:
A new law signed by California governor Jerry Brown in September permits PG&E to pay for last year’s fire damage liabilities, estimated to be as much as $17 billion, through bonds funded by customer fees. Critics of the measure call it a bailout for PG&E, whose electrical equipment was found to have caused 17 of 21 wildfires in Northern California last year.
The law, which goes into effect on January 1, 2019, applies to 2017 liabilities and potential liabilities incurred in 2019, though does not pertain to liabilities arising from this year’s wildfires.
That law would need to be altered in order to cover the potential liabilities from the Camp Fire but Bloomberg reports that is already being considered. Meanwhile, Moody’s announced it was downgrading the company’s credit rating to just above junk status.
This local news report is three days old but it gives a clear sense of where the fire is believed to have started. Note that the fire was first reported about 15 minutes after PG&E reported a power outage in this location.
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