As wildfires ravage and destroy extensive areas of California, Pacific Gas and Electric Company (PG&E), one of the state’s biggest utilities, has announced that it is facing billions of dollars in potential liability. With the numbers a lot higher than its insurance would cover, the potential losses could expose businesses and consumers to high costs, and could leave the utility facing bankruptcy, something it previously went through in 2001.
Whilst investigators have yet to determine the origin of Camp Fire, the current set of blazes, PG&E disclosed that damage and an outage to a transmission tower had been reported in the area soon after the fire had started. Downed power lines serving California’s utilities have caused many fires recently, with state officials determining that PG&E-owned electrical equipment was responsible for 17 to 21 major fires in Northern California the previous fall.
The total costs for 2017 and 2018 could reach $30 billion ($15 billion for each), a figure that could rise due to Camp Fire only being a third contained. This would make absorbing the expenses difficult for any party and could force the utility to sharply increase rates, with residential customers within the utility’s territory left to be covering the costs.
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