Economy

Giant utility facing California wildfire claims explores bankruptcy, sources say

Giant utility facing California wildfire claims explores bankruptcy, sources say

PG&E's stock lost 64% of its value over the course of a month a year ago after the Camp Fire. The fires have underscored how vulnerable utilities are to natural disasters, especially in California, where they can be held liable for damages even if they aren't found to be negligent.

Shares were down more than 18 percent in premarket trading. That indicated the shares are poised for one of their biggest moves since November 14, when PG&E said it had exhausted its revolving credit line and was preparing for a downgrade to junk. The company was considering the move, for some or all of its businesses, as it fears a massive charge in the fourth quarter related to potential liabilities from wildfires.

A bankruptcy filing is not PG&E's preference for addressing liabilities from the catastrophic blazes, some of the sources said. As part of the bill, PG&E will be able to issue bonds backed by surcharges from its customers. Holden didn't immediately respond to a request for comment sent after hours on Friday. But the stock had rallied back by about a third after the president of the California Public Utilities Commission suggested that the state would work with PG&E to ensure that it would not be permanently crippled by lawsuits. His agency later began a formal process to evaluate whether to break up or take over PG&E's Pacific Gas and Electric utility.

"We want to tap fresh perspectives and additional expertise to help address the changing nature of PG&E's business and the challenges it faces now and in the future", the board said in a statement.

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S&P Global Ratings on Monday stripped PG&E Corp of its investment-grade credit rating, citing indications of a significant deterioration in the political and regulatory environment for the California power utility. Because of potential legislative aid, PG&E has not yet determined whether it will make a bankruptcy filing, Reuters reported.

Reuters reported previous year that the company was working with bankruptcy advisors.

Konolige, meanwhile, wouldn't rule out what he called a strategic bankruptcy.

-With assistance from David R. Baker.