Since Wildfire is massively devastating California for the second year, one of the state’s largest utilities has announced that it faces billions of dollars in potential liability – more than its insurance. Possible losses can leave the Electricity Companies in California’s customers on the hook to pay the bill, exposing high costs to businesses and consumers. Utility, Pacific Gas and Electric Company may also face bankruptcy, which puts pressure on the state for a bailout.
With the increase in financial liabilities, the shares of the Electricity Companies in California fell by more than 20 percent on Wednesday. More than half of its market value has been erased since the end of last week because the fire has spread.
The investigators have so far determined the most deadly cause of current blades known as the Cannaz Fire, which has killed at least 56 people and almost completely destroyed the entire city of paradise, which is almost near Sacramento 90 miles north. PG & E on Tuesday revealed in a regulatory filing that a transmission tower had been informed of loss and damage some time before the fire last week.
In recent years, many fire caused due to power lines serving California utilities. State officials have determined that electrical appliances owned by PG & E including power lines and poles were responsible for at least 17 of the 21 major fire in Northern California. In eight of those cases, they referred to the findings of the possible violations of state law to the prosecutors.
Citigroup estimates that the risk of PG & E’s liability for those fire is $ 15 billion – and it can face another $ 15 billion in claims if it is found responsible for the camp fire, a number that increases Because the fire only contains one-third.
Senior researcher Mark Cooper of the Economic Analysis in Institute for Energy and the Environment at the Warmont Law School said that the compounding cost of year-to-year wildfire is making it difficult to meet the expenses for any party.
If the utility is forced to increase rates rapidly, then costs can be a financial toll. Electricity Companies in California can choose to move their business outside the service area or even outside the state. Within the area of utility residential customers can be left to cover the costs.
“It becomes a humble challenge,” said Mr. Cooper. “If they try to increase and raise prices, they can not be able to get them. Should they be allowed to charge every price even if they were guilty of rude behavior? ”
PG and E had said their liability insurance for the year that started on August 1 and its amount was $ 1.4 billion.
Lynsey Paulo, a spokeswoman for PG & E, said that the utility was focused on helping the fight against the current wildfire instead of the Electricity Companies in California economics. The Electricity Companies in California has set up a base camp with 800 employees in the area of campfire, he said, a figure which is expected to increase to 1,000 by the end of the week and can reach 3,000.
Ms Polo said, “We can not predict whether or not we can influence the stock market.”
Critics of utilities say that failure to trim the vegetation around poorly maintained power lines and electricity lines is a major cause of fire. On hiking in San Jose in the last spring, a former state regulator showed overloaded rods with the weight of stars and cables as well as electric lines running through the tree leaves.
“Security culture” of PG & E is a matter of three years’ investigation by the State Public Utility Commission. It is expected from the agency to work on the findings of the investigation in the beginning of this month.
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Apart from forest fire, in this decade, PG & E was found to be one of California’s biggest disasters – in 2010 a natural gas explosion that devastated San Francisco’s suburbs of San Bruno and eight people died . The state was fined $ 1.6 billion to fail PG & E to keep its pipeline system properly, and paid $ 900 million to resolve the blast lawsuits.
“We have got a system failure to destroy PG and E and to be responsible for the devastation,” said Frank Petre, a lawyer, who has represented gas explosions and PG & E customers, including 35 people, Those who have lost property in heaven. Fire. “And it’s going on. How many more people died? How many more communities have to be destroyed? It’s closed. “