Utility company Pacific Gas and Electric (PG&E) is now facing new issues after a federal judge issued a ruling that essentially unfroze over $18 billion in damage claims for wildfire victims. The decision immediately sent the company's already suffering stocks lower by as much as 30 percent to $10.05 on Monday.
The drop in the company's stocks was one of the worst days for PG&E since it announced that it was filing for bankruptcy protection back in January. The company was forced into the decision as it faced potential wildfire liabilities estimated to cost up to $30 billion.
A decision was released by US Bankruptcy Judge Dennis Montali on Friday, which allowed a court trial to ultimately decide the company's involvement in the 2017 Tubbs Fire. The blaze had killed 22 people and destroyed more than 5,600 structures in Northern California in October 2017.
PG&E is already facing litigation for the 2018 Camp Fire incident, officially the worse wildfire in California history. The Tubbs Fire was the second most destructive fire to have ever occurred in the state.
In response to the decision, PG&E released a statement denying that the fires were caused by its equipment. The company also stated that it has already launched comprehensive measures aimed at assisting wildfire victims and to put the firm back to the path of becoming the energy company that its customers deserve.
According to analysts, the decision to have a jury trial in PG&E's case presents quite a big risk for the company and its investors. Even if the California Department of Forestry and Fire Protection (Cal Fire) had stated that PG&E's equipment wasn't to blame for the wildfires, a jury trial could reverse that narrative. This is especially risky given PG&E's history of having poor safety protocols in its operations.
The decision could very well spell disaster for the company, which was thought to have been completely absolved of responsibility for both the wildfires. PG&E was able to slowly recover after investigators ruled that the blaze was caused by privately-owned electrical systems and not PG&E's equipment.
Some Analysts have forecasted that PG&E's shares could plummet to as low as $4 per share given the real risk of significant liabilities involving the Tubbs wildfire. The value is roughly only half of its current market pricing. The only upside to the company's current situation is that it had managed to retain control of its multi-billion bankruptcy plan, which is a big win for its investors.
