PG&E Facing SEC Investigation Over Wildfire Losses As Profits Drop
Troubled utility firm PG&E announced Thursday that it is currently being investigated by the US Securities and Exchange Commission (SEC) over its losses related to the recent wildfires and its public disclosures. The investigation was declared in the company’s regulatory filing, which indicated that it was informed of the SEC probe back in March.
The probe includes a closer inspection of its losses involving the 2015 Butte fire and the 2017-2018 Northern California wildfires. Of the tragic fires, the blaze that happened in November of last year was the deadliest in California history, killing at least 86 people.
Apart from the probe, PG&E is currently facing a number of lawsuits from a number of its electric and natural gas customers in northern and central California. The company currently supplies utilities to around 16 million customers in the area. All in all, the potential liability the firm faces is estimated to exceed US$30 billion.
Following the slew of fires and litigation, PG&E filed a Chapter 11 bankruptcy protection in January of this year. This protected the company from the potentially billions in losses linked to its equipment and litigations.
The recent incidents and the bankruptcy filing negatively affected the company’s profits, which plunged by more than 69 percent in the first quarter of 2019. PG&E had to deal with mounting litigation expenses and expenses related to its bankruptcy case. The firm reported first-quarter profits of US$136 million, a drastic drop from its US$442 million in profits in the first quarter of 2018.
PG&E explained that the drop in its profits was mostly due to the cost of its area-wide equipment and electrical system inspections. It also stated that it lost quite a lot of money in the clean-up and repair of the damage caused by the Butte County fire last year and the fire in North Bay Wine Country in 2017.
All of the expenses were on top of its mounting legal expenses and expenses incurred in its January bankruptcy filing. According to the company, it recorded a US$410 million one-time expense related to the fires and its bankruptcy filing at the start of the year.
The firm reported electric operations revenues of US$2.79 billion for the quarter, which is a 5.4 decrease from the same quarter last year. Gas operations earned the company US$1.22 billion, a 10.3 percent increase from the same quarter last year. Total revenues for the firm totaled US$4.01 billion for the first quarter, down 1.1 percent when compared to its revenues for the same quarter last year.