SAN FRANCISCO, Nov 15 (Reuters) – Shares of PG&E Corp sank 29 percent on Thursday, bringing the loss in its stock market value to nearly $16 billion since the breakout of a deadly wildfire in northern California that investors fear will be blamed on the utility.
After PG&E warned this week that it could face liability in excess of its insurance coverage if its equipment caused the Camp Fire that a week ago destroyed the town of Paradise, Mizuho analysts on Thursday estimated the company’s potential after-tax exposure from the blaze could reach $13 billion.
The causes of the Camp Fire, and a second in Southern California, the Woolsey Fire, are still under investigation. Pacific Gas and Electric Co, PG&E’s subsidiary, and Edison International’s Southern California Edison have both told regulators they experienced equipment problems in areas around the times the fires were first reported.
Since the outbreak of the Camp Fire on Nov. 8, PG&E’s stock has plummeted over 60 percent.
In a bid to shore up its finances, PG&E said this week it borrowed more than $3 billion under credit lines available to it and Pacific Gas and Electric Co, the maximum available from those sources.
“As the company’s cash position diminishes, the risk of bankruptcy could increase unless politicians intervene.” Mizuho analyst Paul Fremont wrote in a note to clients on Thursday.
“For now, we look for signs of additional legislative and regulatory support for PG&E as the company works through the various legal processes with the California Department of Forestry and Fire Protection (Cal Fire).”
Still not under control, the fire is the deadliest in California history, blamed for at least 56 deaths and the destruction of thousands of homes and commercial properties.
To keep PG&E from going bankrupt, California policymakers will face pressure to extend assistance provided in a bill approved last September allowing utilities to pass on to customers some of the costs related to wildfires, according to Moody’s. The bill mitigates liability from fires in 2017 and others starting in 2019, but made no provision for fires this year.
Reporting by Noel Randewich; Editing by Lisa Shumaker