Shares of PG&E zoomed higher on Friday after the head of the Public Utilities Commission said the agency would ensure the utility’s wildfire costs would not overwhelm the company’s financial stability.
At the same time, the PUC has decided to open an investigation into PG&E’s role, responsibilities and liabilities in connection with the disastrous Butte County inferno known as the Camp Fire that has killed at least 63 and essentially destroyed the town of Paradise. The cause of the fire has not yet been determined, but PG&E power lines are one of the possibilities.
But PUC President Michael Picker, in announcing the probe, also made it clear that PG&E wouldn’t be shoved into insolvency by being forced to pay more than it can afford.
PG&E shares soared 37 percent in midday trades on Friday. The stock was propelled higher after Picker, who is president of the PUC and the commission’s top boss, participated in a conference call arranged by Bank of America. During the call, Picker assured Wall Street insiders that the PUC wouldn’t allow PG&E to go bankrupt.
New legislation known as SB 901, signed by Gov. Jerry Brown, allows the PUC to use a utility’s financial ability to pay for wildfire costs as a way to set a ceiling on such liabilities.
This legislation, for which PG&E heavily lobbied, also ensured that PG&E would be protected from burdensome payments in connection with the deadly Wine Country infernos in October 2017.
That and other protections could mean PG&E ratepayers would foot the bill for PG&E’s past, present and future wildfire related liabilities. Last month, the utility sought to raise its customers’ monthly bills to help shore up its electrical system.
“An essential component of providing safe electrical service is the financial wherewithal to carry out safety measures,” Picker said in a prepared release.
State regulators on Friday indicated the provisions of SB 901 would be applied to guard against a bankruptcy for the utility.
“A utility filing bankruptcy is not in the best interest of consumers, but that decision is not the PUC’s,” PUC spokeswoman Terrie Prosper said in comments e-mailed to this news organization Friday.
PG&E noted that the cause of the fire has yet to be determined.
“We agree with PUC President Picker’s statement that an essential component of providing safe electrical service is long-term financial stability,” PG&E said in a prepared release.
Picker also indicated that it may be time to take a look at PG&E’s structure. This sort of review could break up PG&E into multiple new companies, or alter its profit-driven way of operating.
“I will open a new phase examining the corporate governance, structure, and operation of PG&E, including in light of the recent wildfires, to determine the best path forward for Northern Californians to receive safe electrical and gas service in the future,” Picker said.
State Sen. Jerry Hill, a frequent critic of PG&E and the PUC whose district includes parts of Santa Clara County and San Mateo County, said in an interview with this news organization that he has been calling for a restructuring of PG&E.
“I’ve been saying all week that we need to take a look at PG&E’s structure and operations,” Hill said. “Maybe the business model of PG&E is not allowing it to be the safe utility we want it to be. Maybe PG&E is too big to succeed.”
San Francisco-based PG&E has been branded a convicted felon after being convicted in a federal court in 2016 for crimes the company committed before and after another lethal disaster, the San Bruno gas explosion in 2010 that killed eight and destroyed a Peninsula neighborhood.
“It was clear that with the San Bruno explosion, PG&E was putting profits ahead of safety,” Sen. Hill said. “I think PG&E is still putting profits ahead of safety, at least in terms of electricity operations.”