PG & E shares have again fallen by 20% Monday due to the utility of this utility, which potentially risks multi-billion dollar fines resulting from the deadliest forest fires in the history of the state (while striving to settle claims related to a string of fires that decimated the California wine country 2017), faces a retreat and skepticism from lawmakers following reports last week that it could declare bankruptcy next month.
according to BloombergCalifornia lawmakers, who were supposed to bail out public services, are calling into question the political prudence of yielding to the threats of the bankruptcy of public services.
It is widely believed that the threat of bankruptcy would force California lawmakers to enact legislation permitting PG & E to pass on fire costs to its customers – a result that could enrage Californians who suspect that Company equipment contributed to the startup of the system. Mortal Camp and Woolsey Fires.
As investigators advance their investigation into the causes of the deadly fires, the question of what should be done to make PG & E responsible for any role in the fires may well be one of the first major California Governor Gavin Newsom, recently inaugurated, is expected to be sworn in on Monday.
As BBG reported, even though PG & E was following up on its bankruptcy threats, they might not be enough to put pressure on lawmakers to act, which could lead to serious risks for banks. shareholders of PG & E.
A potential bankruptcy may be enough to force the hand of state legislators who are considering a rescue plan for the utility in trouble. Katie Bays and Clayton Allen, analysts at Height Securities LLC, will have to decide in a Monday note to let taxpayers part of the costs of the fire.
Bankruptcy "should be considered a credible risk by shareholders," they said. "Even if we think that sufficient support for such a bill could possibly be collected, abusive tactics and reluctance to change will not improve" the company's profile.
PG & E does not "comment on market rumors or speculation," spokeswoman Lynsey Paulo said Monday in an email.
Since the fires, PG & E shares have lost up to half their value, while bond yields have skyrocketed.
But for what it's worth, the utility says it's "working diligently" to determine what it might owe because of the wildfires. There has also been speculation that she could sell her oil and gas unit to pay fines in excess of her insurance coverage, as well as dozens of ongoing lawsuits.
In a statement released Friday evening, PG & E said "work diligently to assess the potential liabilities of society resulting from forest fires and ways to resolve them." We recognize the need to balance the interests of many parties stakeholders while maintaining security, reliability and affordable services for our customers, which is always our top priority. "
And, with the resumption of the California legislature Monday, some lawmakers warned that they would not allow PG & E to use the threat of bankruptcy as a means of pressure as in the past.
The California legislature is scheduled to meet today after the school holidays. The state senator, Jerry Hill, spokesman for PG & E, said the utility had previously raised bankruptcy as a means of pressure when he was seeking to get help from the state to discharge its responsibility against forest fires in 2017. The company could be engaged in similar behavior now, he said.
"You can not trust what they say," said Hill, who represents San Bruno, where a PG & E gas pipeline exploded in 2010, killing eight people. "Last year, they managed to deceive the legislature with the story of bankruptcy or bailout, and the legislature gave them a bailout."
Nevertheless, the fact that PG & E is the largest utility company in California and the country provides a significant advantage. Analysts have warned that the company could run out of money before the end of the year … which could create serious problems not only for PG & E, but also for Californian consumers.
PG & E "could face a liquidity crisis by mid-1919," Greg Gordon, an analyst at Evercore ISI, said in a research note on Monday.
But as part of a workaround, the state commissioner of public services assesses a possible break-up, as well as a takeover by the state.
California Utilities Commission chief Michael Picker said that same month he could not imagine allowing the state's largest utility to go bankrupt. His agency then began a formal process to determine whether it was necessary to break or resume PG & E's Pacific Gas and Electric utility.
Earlier Friday, PG & E said in a statement that it already took account of changes both in its board of directors and in the structure of its activities. An option under consideration: the sale of its natural gas business after a bankruptcy, said the regulars of the case. Kit Konolige, analyst for Bloomberg Intelligence.
But even a state takeover would not necessarily prevent the resumption of catastrophic fires or other serious oversight failures.
"Breaking or setting up the management of the company, these are incredibly complicated proposals that do not indicate that they would succeed, certainly not in the near future," he said. "The assumption that everything you put up at PG & E would be better – it's really unproven."
But while lawmakers are discussing exactly what should be done about PG & E, one thing is certain: Expect every new detail to have an impact on the mishandled actions of PG & E.