That news led to a more than 60% plunge in the stock
in the past week as investors worried that the utility did not have the financial resources to cover legal liabilities tied to the fire.
Lawyers representing victims of the fire have already filed two class action lawsuits against PG&E. And Fitch Ratings downgraded PG&E’s credit rating Friday, citing potential for PG&E to pay huge liabilities. If PG&E is found to have sparked the wildfires, Fitch said it could downgrade its stock several more notches into “junk” territory.
But the stock was up nearly 40% Friday after the president of the California Public Utilities Commission (CPUC) suggested that the state would work with PG&E to ensure that it would not be permanently crippled by lawsuits.
“An essential component of providing safe electrical service is the financial wherewithal to carry out safety measures,” said CPUC president Michael Picker in a statement.
Picker added that as a result of a new law signed by California governor Jerry Brown last year, the CPUC is now required to consider a utility’s finances when determining the maximum amount it can pay without harming customers when evaluating damages caused by wildfires.
As part of the bill that Brown signed, PG&E will now be able to issue bonds backed by surcharges from its customers. Those bonds willhelp pay for damages tied to deadly California wildfires in October 2017 caused by faulty PG&E equipment.
The bill allows for the possibility that utilities could issue similar bonds for future fires, but that is not guaranteed.
In a separate interview with Bloomberg
late Thursday, Picker said “it’s not good policy to have utilities unable to finance the services and infrastructure the state of California needs. They have to have stability and economic support to get the dollars they need right now.”
Even after Friday’s big rally, PG&E is still more than 45% below where it was trading the day before the fire started.
PG&E has previously indicated that it renewed its liability insurance coverage for wildfire events for an amount of approximately $1.4 billion that covers the period from August 1, 2018 through July 31, 2019.
But the estimated damages are rising rapidly. Moody’s said earlier this week that it could cost up to $6.8 billion, while Citigroup estimates the damages could be as high as $15 billion.
The utility’s total market value is now below $15 billion though, and PG&E said in its filing that it currently has just $3.46 billion in cash after borrowing from an existing revolving credit line.
That’s why it will be critical for the state of California to assist PG&E if it is found liable for the Camp Fire.
“We agree with CPUC President Picker’s statement that an essential component of providing safe electrical service is long-term financial stability,” PG&E said in a statement. “Access to affordable capital is critical to carrying out safety measures and meeting California’s bold clean energy goals.”
CNN’s Amanda Watts contributed to this story