California’s Largest Utility Could Go Bankrupt Over The Deadly Wildfires
Pacific Gas and Electric (PG&E) is raising concerns that it might be preparing to file for bankruptcy as questions loom over its involvement in the raging California wildfires.
In a filing with the Securities and Exchange Commission (SEC) on Tuesday, PG&E, California’s largest electric utility, revealed that it has withdrawn all of the available cash from its revolving credit lines — an action typically taken by companies before a bankruptcy filing.
“This is a surprising move and it is potentially consistent with a bankruptcy filing,” Michael Wara, a professor at Stanford Law School, stated to Utility Dive, “but there are other potential explanations that are also possible, especially under the circumstances in which PG&E finds itself.”
While PG&E assured Bank of America that this is not the case, an official with the bank still expressed panic over the situation.
“We had a chance to catch up with the company,” Dumoulin-Smith, a Bank of America-Merrill Lynch analyst, wrote to clients, “noting that this isn’t an indication of pre-filing for bankruptcy as they have $800 [million] of short-term debt coming due over the next three months as well as historical debt maturing in excess of $1 [billion].” (RELATED: As California Burns, Jerry Brown Takes Heat For Vetoing 2016 Wildfire Mitigation Bill)
“However,” Smith added, “the reality is that this is very alarming given the timing as we don’t know the specifics of the situation.”
News of PG&E’s financial managements comes as California officials investigate the cause of several wildfires that have devastated the state. The Woolsey and Hill fires in Southern California have destroyed hundreds of buildings and forced the evacuation of thousands. The Camp Fire in Northern California has become the deadliest in the state’s history.
Evidence suggests PG&E equipment could possibly be responsible in starting some of the fires.
The utility reportedly reached out to a local woman living in the town of Pulga, California, a day before the fire began, informing her that there were issues with their power lines and they needed access to her property. PG&E did inform the California Public Utilities Commission of a power failure on a transmission line.
If PG&E is held responsible for Camp Fire, it wouldn’t be the first time for the company. California found PG&E wires to be the cause of 16 fires in 2017.
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