A West Coast utility under the microscope of shareholders and fire investigators could be behind what sparked the deadly Camp Fire in California. The Associated Press reported Thursday that Pacific Gas & Electric Co. (PG&E), which faces a finacial crisis, unveiled dangers confronting its transmission lines running through Northern California. The company said they faced a higher risk of wildfires than any other utility in the region.
In anticipation of a possible wildfire in Northern California, PG&E in October asked U.S. energy regulators for permission to raise monthly bills of their customers in order to bulk up their systems to help prevent such fires, all while showing a tidy little profit to shareholders.
"The implications of PG&E's exposure to potential liabilities associated with wildfires are dramatically magnified," the filing said. "Overcoming the negative financial impact of any significant damages that might ultimately be attributed to PG&E will require an ongoing commitment of capital from investors."
PG&E made this request about a month before the Camp Fire ignited and spread on Nov. 8, just one week ago. The San Franciso-based company is one of the country's largest electric utilities and serves a giant swath of Northern and central California. Though no cause of the fire has been publicly noted, speculation swirls around PG&E, which reported an outage at almost the precise time and place of where this deadly fire began.
PG&E's shares have nose-dived 60 percent in the last week, resulting in a market loss of $15 billion.
Furthermore, PG&E last month filed a report stating it needed to boost revenues to keep investors on board. The company's credit rating was also downgraded, and, on top of that, the 2017 fires caused another market tumble.
"PG&E's electrical system is not immune from the impact of increases in the frequency and severity of extreme weather," said Lynsey Paulo, the company spokeswoman, in the AP report.
Michael Picker, president of the California Public Utilities Commission released a statement Thursday stating "an essential component of providing safe electrical service is the financial wherewithal to carry out safety measures." Picker also said he's "expanding an investigation of PG&E's safety culture to look at the company's corporate governance, structure and operation."
And though PG&E shares bounced back a little Thursday evening after the day's losses, their market value sits well below the line before the Camp Fire started..
In a state that seemingly faces wildfires on a yearly basis, California passed a law this year that simplifies a company's ability to raise rates in order to pay off lawsuits, but PG&E said it will face a higher risk.
The fires, combined with a plummeting market value, leaves some skeptical on the future of the company and its finances.
"It's going to be very difficult for PG&E to finance its needs in the short run, so we think at this point, regulators need to step in and give the market some reassurance," said Travis Miller, a strategist at Morningstar.
PG&E asked for a 9.5 percent rate increase so it could move power across a greater distance. The rate hike equates to an avarega of about $1.50 or more a month for each residential customer.
Those who speak for the customers don't buy PG&E's request to raise rates simply because of fires.
"We don't pay electric bills in order to keep bailing PG&E out from its own negligence and incompetence, and we can't afford it," said Mindy Spatt, communications director for The Utility Reform Network.
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