SAN FRANCISCO--(BUSINESS WIRE)--
PG&E Corporation and its subsidiary, Pacific Gas and Electric Company
(utility), today announced their intention to record an estimated
pre-tax charge in the amount of $2.5 billion for the quarter ending June
30, 2018.
The company filed a Form
8-K with the Securities and Exchange Commission this morning and
will discuss the currently expected charge on an investor conference
call with the financial community later today.
The public can access the conference call via a simultaneous webcast.
The link is provided below and will also be available on the PG&E
Corporation website.
The company noted that, in accordance with generally accepted accounting
principles, PG&E Corporation and the utility evaluate the range of
reasonably estimated losses and record a charge based on the lower end
of the range unless an amount within the range is a better estimate than
any other amount. The companies are currently unable to reasonably
estimate the upper end of the range because there are a number of
unknown facts and legal considerations that may impact the amount of any
potential liability.
Currently, the charge is expected to be recorded in connection with the
Northern California wildfires referred to as the La Porte, McCourtney,
Lobo, Honey, Redwood, Sulphur, Cherokee, Blue, Pocket and Sonoma/Napa
merged fires (which include the Nuns, Norrbom, Adobe, Partrick and
Pythian fires). The charge does not include any amounts for potential
penalties or fines that may be imposed by governmental entities. It also
does not include any amounts in connection with any of the other
Northern California wildfires (including the Atlas, 37, Tubbs, Cascade,
Maacama, Pressley and Point fires) because at this time PG&E Corporation
and the utility have not concluded that a loss arising from those fires
is probable. However, in the future it is possible that facts could
emerge that lead PG&E Corporation and the utility to believe that a loss
is probable, resulting in the accrual of a liability at that time, the
amount of which could be significant.
PG&E Corporation CEO and President Geisha Williams said that recording
the charge was made necessary because of the state’s flawed policy of
inverse condemnation and demonstrated the urgent need to reform the
policy.
California is one of the only states in the country where the courts
have applied inverse condemnation liability to events associated with
investor-owned utility equipment. This means PG&E could be liable for
property damages and attorneys’ fees even if the company followed
established inspection and safety rules. Based on the information PG&E
has so far, the company continues to believe its overall programs met
the state’s high standards.
“These fires were tragic and we remain focused on helping communities
recover and rebuild. Looking forward, the state, first responders and
California’s utilities are all in agreement that we must work together
to prevent and respond to wildfires and enhance infrastructure
resiliency. Years of drought, extreme heat and 129 million dead trees
have created a ‘new normal’ for our state that requires comprehensive
new solutions,” Williams said.
Extreme weather is increasing the number of large wildfires and the
length of the wildfire season in California. According to CAL FIRE, in
2017 alone, CAL FIRE confronted 7,117 wildfires, compared to an average
of 4,835 during the preceding five years. Five of the 20 most
destructive wildfires in the state’s history burned between October and
December 2017.
Comprehensive solutions must go beyond utility practices to address
items such as improvements in forestry management and in building codes.
In addition, the state must address the availability and affordability
of insurance coverage as well as reforming California’s unsustainable
policies regarding wildfire liability.
“Liability regardless of negligence undermines the financial health of
the state’s utilities, discourages investment in California and has the
potential to materially impact the ability of utilities to access the
capital markets to fund utility operations and California’s bold clean
energy vision,” Williams said.
Reforming inverse condemnation would not absolve utilities from
responsibility. Anyone harmed by these tragic wildfires has the ability
to pursue a negligence claim in court. Furthermore, the CPUC, which
regulates utilities, has the authority to investigate and evaluate a
company’s conduct and performance and deny the recovery of costs if such
conduct did not meet the state’s high standards.
“We are committed to advocating with legislative leaders and
policymakers across the state on comprehensive legislative solutions for
all Californians, as we collectively seek to meet the challenge of
climate change, and position the California economy for success,”
Williams said.
Forward-Looking Statements
This news release includes forward-looking statements that are not
historical facts, including statements about the beliefs, expectations,
estimates, future plans and strategies of PG&E Corporation and the
utility. These statements are based on current expectations and
assumptions, which management believes are reasonable, and on
information currently available to management, but are necessarily
subject to various risks and uncertainties. In addition to the risk that
these assumptions prove to be inaccurate, other factors that could cause
actual results to differ materially from those contemplated by the
forward-looking statements include factors disclosed in PG&E Corporation
and the utility’s annual report on Form 10-K for the year ended December
31, 2017, their quarterly report for the quarter ended March 31, 2018,
and their subsequent reports filed with the Securities and Exchange
Commission.
If you are unable to participate during the live webcast, the call will
be archived at http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx.
Conference Call Replay
Alternatively, a toll-free replay of the conference call may be accessed
shortly after the live call through July 5, 2018, by dialing (866)
415-9493. International callers may dial (205) 289-3247. For both
domestic and international callers, the confirmation code 24687# will be
required to access the replay.
Please contact Investor Relations at (415) 972-7080 if you have any
questions.
PG&E Corporation (NYSE: PCG) is a Fortune 200 energy-based holding
company, headquartered in San Francisco. It is the parent company of
Pacific Gas and Electric Company, California’s largest investor-owned
utility. PG&E serves about 16 million Californians across a 70,000
square-mile service area in Northern and Central California. For more
information, visit the Web site at www.pgecorp.com.
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Source: PG&E Corporation