PG&E profits down as utility confronts fire costs, disaster preparedness
Pacific Gas & Electric Co. said Thursday it will pursue all legal and legislative avenues to find ways of defraying rising costs of devastating events, like the October wildfires, that state regulators assign to utility companies when they’re deemed responsible.
The details of PG&E’s long-term strategy to deal with the potential liability and costs for the Northern California wildfires and future disasters emerged during an earnings call Thursday morning. The investor-owned utility reported first-quarter profits dropped 23 percent, in part because of financial impacts from the October firestorm.
Net income fell to $442 million, or 86 cents per share, in the quarter ending March 31, down from $576 million, or $1.13 a share, in the same period a year ago. Profits suffered, in part, from $170 million in one-time expenses, including costs from wildfires in 2017 and 2015, and unrelated costs for new pipelines. The October fires account for upward of $50 million of those charges.
The company is lobbying for changes to state laws that allow regulators to hold utilities liable for property damage and attorney fees when their equipment is determined to be the leading cause of a wildfire. Current laws prevent utilities from passing such costs onto customers through rate hikes.
The company’s CEO and president, Geisha Williams, said such laws should be changed quickly, given the heightened frequency of extreme weather events and the extent of their damage.
“There is growing evidence that these wildfires may become more destructive in future years, and we must adapt,” Williams said in prepared remarks. “We see common ground on many of the issues that have been raised and we look forward to collaborating on solutions.”
PG&E faces dozens of lawsuits seeking damages for at least 2,500 residents who lost homes in the inferno. Insurance companies and local governments, which together incurred hundreds of millions of dollars in disaster costs, have also filed claims. PG&E has challenged the legal basis for the claims while reiterating that investigators have not yet determined the cause of the fires.
The utility opted not to forecast profits for the remainder of the year as it braces for Cal Fire’s pending investigative report on the source of the Northern California fires, which broke out in many places near downed wires and other damaged equipment.
PG&E said it is taking a three-pronged approach to limit the effects of large-scale wildfires. In addition to bolstering safeguards to its grid and expanding brush clearing, PG&E said it’s working with regulators on more preventative measures in high-hazard zones as well as urging lawmakers to change the rules on the financial penalties that can be imposed on utility companies in the wake of such catastrophes.
“It is important to have policies in place to provide a sustainable financial future for the state’s energy companies,” Williams said. “Ultimately, we’re fighting for a reasonable outcome — not only for PG&E, but also the customers who we serve and the people of California.”