Monday , November 23 2020

California's largest aid requested to wander bills of fires



(SACRAMENTO, California) – A tool that faces serious economic pressure among speculation, the equipment may have triggered a fatal North African fires that asked US energy authorities last month for permission to raise their customers' monthly bills to cure their system against fires and deliver a significant increase in profits to shareholders.

In an October application with the Federal Energy Regulatory Commission, Pacific Gas & Electric Co. out a series of dangers that confront the transmission lines that extend through northern California and say that the system faced a higher risk of fires than any other tool.

"The implications of PG & E's exposure to potential liabilities associated with fires are dramatically enlarged," said filing. "To overcome the negative economic impact of any material damage that can ultimately be attributed to PG & E will require a permanent commitment to capital from investors."

San Francisco-based PG & E – one of the country's largest power tools serving most of northern and central California – requested a month before the campfire struck on November 8th and quickly ballooned into the deadliest US firefire for a century. No cause has been determined, but speculation has been centered on PG & E, which reported an interruption when and where the fire was ignited.

The company has lost $ 15 billion in market value, stocks fall 60 percent in a week.

PG & E is already facing financial pressure from its suspected role in a series of fatal fires in California wine country last year. The company's submission last month said it was necessary to increase revenues to keep investors from flying and note that the credit rating was downgraded and stocks had fallen since the 2017 fires.

Wildfires threatens PG & E's ability to attract and retain the investment needed to support its system and meet California's clean energy goals, said company spokesman Lynsey Paulo.

"PG & E's electrical system is not immune to the effect of increases in frequency and the severity of extreme weather," said Paulo.

California Public Utilities Commission President Michael Picker tried to calm the financial markets at the end of Thursday with a statement that "an important component of providing secure electrical services is financially for implementing security measures." But he added that he expanded a survey of PG & E's security culture to look at the company's "corporate governance, structure and operations".

The PG & E shares recovered in the aftermarket trade, recovered Thursday's losses but remained far below their value when the fire broke out.

The company said in its price increase request that the extreme fire risk motivated a higher profit than average profit may earn. It cites a California legal standard holding tool that is completely responsible for damage caused by their equipment regardless of whether the company was negligent.

A state team approved this year makes it easier for the company to raise interest rates to pay for trials, but the company says it is still high risk and had no relief for fires that started this year.

The depreciated decline in share prices shows that investors not only take into account the fires, but also the risk of future fires, for which the tool can be responsible, analysts say.

"It will be very difficult for PG & E to fund their needs in the short term, so we believe that regulators now have to go in and give the market a certain assurance," said Travis Miller, a strategist at Morningstar.

PG & E requests a 9.5 percent increase in transmission charges – the cost of high-voltage lines across long distances. That amounts to about $ 1.50 a month for the average housing customer, said Paulo.

Advocates for beneficial customers have been affected by PG & E's claim that it needs to raise prices due to fires. They say that the problems are the result of poor management decisions.

"We do not pay electricity bills to keep PG & E out of its own neglect and incompetence, and we can not afford it," said Mindy Spatt, Communications Manager for The Utility Reform Network.

PG & E reported to the Securities and Exchange Commission this week that it had renewed its insurance coverage for fires to approximately $ 1.4 billion for the year that covered this season. However, an analyst at Citi Investment Research's estimated injuries can exceed $ 15 billion. And the company's potential responsibility for last year's fires has been linked up with $ 10 billion.

Some analysts believe that PG & E will be able to survive economically as long as there is no other major disaster. But wild fires are getting bigger, lethal and more destructive, as homes push into the countryside and the drought and high temperatures associated with climate change become the norm.

"The company does not earn enough money to pay for it in any sort of way," said Michael Wara, director of climate and energy policy at Stanford University. "These must be extreme, once in generations."

PG & E's ability to raise capital will be limited, so it will probably be forced to reduce costs such as replacing aging equipment, analysts say. California tools must also invest in the type of upgrades that enable the state to meet its aggressive renewable energies and carbon dioxide reduction targets.

Fire investigators have blamed out PG & E equipment for 12 of last year's fires, including two that killed 15 people in combination. In eight of these fires, investigators said they found evidence of violations of state law and forwarded the results to prosecutors.

The company faces dozens of trials from insurers and people who lost their homes last year. And a trial this week, PG & E blames the latest fire and accuses the company of not effectively maintaining power lines.

California regulatory authorities generally allow tools to pass the costs of these trials to their customers, but only if the company can show it carefully managed its equipment. The new state act makes it easier for tools to bill customers if they can show that the fire is exacerbated by things beyond its control, such as difficult weather. But legislators did not release the standard that blames all the tools, which is unique to two states.

"Very serious damage to the size of California's tools is very rare in other states," says Hugh Wynne, Sector and Sovereign Research, an investment research company.

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