PG&E, the largest U.S. energy utility, said Monday it will file bankruptcy as it faces potential liabilities of more than $30 billion from a series of devastating California wildfires.
November’s Camp fire, the deadliest wildfire in California’s history, has added to the burden on PG&E from blazes that torched Northern California’s wine country in 2017.
In a regulatory filing, the San Francisco-based company said it had only $1.5 billion in cash and cash equivalents on hand as of Friday and expects its losses from 2017 and 2018 “will greatly exceed its available insurance.” The potential losses include about $17 billion in insurance claims and billions more in legal liabilities.
PG&E is “facing extraordinary challenges,” the company said, adding that a Chapter 11 filing “is ultimately the only viable option to restore PG&E’s financial stability.”
As the Los Angeles Times reports, PG&E has seen two-thirds of its market value wiped out since the Camp fire, which killed 86 people, and investigators have been probing whether its equipment ignited the fire.
In trading Monday, the utility’s shares plunged 53% to $8.31.
“Some PG&E critics have called for a government takeover or for the massive company to be replaced by smaller, municipal utilities” but “it’s far from clear that local governments across Northern and Central California have the ability or the desire to take control of PG&E’s infrastructure,” the Times said.
PG&E said it believes it could still raise capital to avoid a Chapter 11 restructuring but its board concluded that “issuing substantial amounts of secured indebtedness … would not address the fundamental issues and challenges PG&E face[s].”
“Moody’s and S&P both recently cut PG&E’s credit rating deeper into junk territory, citing concerns that the company required dramatic government intervention to shore up its finances,” Reuters noted.
The utility expects to file a Chapter 11 petition on Jan. 29, following the expiration of the required 15-day notice to its employees, and to have approximately $5.5 billion of committed financing in place to fund its operations during the bankruptcy process.