PG&E

[Money & Finance]

PG&E Corp.—California's biggest utility—is on the brink of a crisis in light of the possibility a power failure on one of its transmission lines sparked the deadliest wildfire in US history.

The Camp Fire in Northern California has killed at least 56 people (while more than 130 remain missing) and destroyed a record 7,600 homes and other structures.

So what happened? The cause of the fire hasn't been pinpointed just yet, but authorities are looking into PG&E's equipment as a possible source. It reported an "electric incident" about 15 minutes before the first blaze was reported...and in the same area, too.

 

PG&E said it's got $3.46 billion of cash on its balance sheet, plus another $1.4 billion in wildfire insurance coverage.

But damages from the fire could climb as high as $15 billion, Citigroup estimated.

• Needless to say, if PG&E's equipment problems are to blame for the fire, the cost of the damage would exceed its insurance coverage.
• Remember: PG&E already faces up to $17.3 billion in potential liabilities for wildfires from last year, according to JPMorgan.

PG&E stock is down 46% in November, putting it on track for its worst month in at least 46 years. That's including a 21.8% drop yesterday.

And it could get worse. Evercore ISI said, "Every $1 billion of higher exposure to Camp fire liability would impact our [price target for PG&E stock] by a little over $1 per share."

 

"The utility could be subject to significant liability in excess of insurance coverage," PG&E said.

But keep in mind: California enacted a law earlier this year to help utilities (like PG&E) cover the costs of last year's catastrophic fires. And while that measure doesn't address the handling of 2018 fires...

"We think Sacramento will likely step in to protect the utility and its customers," Citigroup said.

[TheWorldNewsOrg]

Exclusive: California utility PG&E explores bankruptcy filing - sources https://t.co/2IJLsEmfAj pic.twitter.com/u13AqRfj4M

— Reuters Top News (@Reuters) January 5, 2019

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