- REUTERS/Sandy Huffaker
- PG&E, California’s largest gas and power company, was trading down 48% on Monday.
- The utility could face billions of dollars in liabilities after being accused of negligence in one of the state’s most destructive wildfires last year.
- CEO Geisha Williams is out, and the company said in a statement Monday that it would seek chapter 11 bankruptcy on or around January 29.
- “PG&E expects to be the subject of numerous additional claims in connection with the 2017 and 2018 Northern California wildfires,” PG&E said in a filing.
- If found liable for certain or all of the costs submitted so far, PG&E’s liabilities could hit $30 billion.
Devastating wildfires engulfed much of Northern California last year, and their effects are continuing to consume the state’s largest utility.
PG&E, short for Pacific Gas and Electric, had plunged 49% as of 11 a.m EST on Monday after the company confirmed its plan to navigate chapter 11 bankruptcy.
The utility’s CEO, Geisha Williams, stepped down Sunday, two days after news emerged that the company was thinking about declaring bankruptcy over the “Camp Fire” wildfires, which devastated California last year and for which PG&E may be held liable.
The California utility owner is in touch with large banks about so-called debtor-in-possession financing. The company confirmed it expected to have $5.5 billion in committed DIP financing in place by the time it files for relief under Chapter 11.
The company’s shares dropped 30% in after-hours trading in New York on Friday after the bankruptcy news emerged.
“PG&E expects its losses in connection with the 2017 and 2018 Northern California wildfires will greatly exceed its available insurance,” the company said in a filing. “PG&E also expects to face increasing difficulty securing liability insurance in future years due to availability and to face significantly increased insurance costs.”
The company has acknowledged experiencing “an outage” on a transmission line in Butte County at 6:15 a.m. on November 8 – just 15 minutes before the Camp Fire broke out. PG&E’s liabilities could stretch to $30 billion, and filing for bankruptcy would shield the utility from costs until it has worked out how best to handle the claims against it, which also relate to another fatal wildfire in 2017.
Last year’s destructive events claimed the lives of at least 86 people and was the deadliest in the state’s history.
Editor’s note: A previous version of this story quoted a figure for DIP financing that has been amended following the company’s statement.