SAN FRANCISCO, Calif.- 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.
What: Investor Conference Call
When: Thursday, June 21, 2018 at 10:30 a.m. Eastern Time
How: Live over the Internet – log on to the web at the address above
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.
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.
About PG&E Corporation
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, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. For more information, visit http://www.pgecorp.com.