In what could foreshadow things to come, the first lawsuits have been filed by California fire victims against the state’s largest utility company PG&E, blaming the company for igniting the still-raging wildfire burning across Butte County.
As of Thursday morning, the Northern California’s Camp Fire had taken the lives of 56 people, and it had burned nearly 140,000 acres — including 8,000 homes and 260 businesses.
A lawyer who filed suit against PG&E on behalf of one of the early plaintiffs said his experts are helping him to understand what caused the fire.
“We have received enough information that leads us to believe that PG&E is responsible for the Camp Fire,” John Fiske of the law firm Baron & Budd said.
When asked how the expert determined the alleged causal connection, Fiske said he could not go beyond his statement based on attorney work product privilege and because the matter is the subject of litigation.
‘The utility could be subject to significant liability’
The company’s stock reached a 52-week low Thursday morning, as investors tried to gauge validity of the plaintiffs’ claims.
Compounding investors’ fears may be PG&E’s most recent 8K filing with the U.S. Securities & Exchange Commission, in which the company notified investors that its insurance coverage would likely fail to compensate victims if the company’s equipment is found at fault.
“While the cause of the Camp Fire is still under investigation, if the Utility’s equipment is determined to be the cause, the Utility could be subject to significant liability in excess of insurance coverage that would be expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows,” the filing states.
Nearly two dozen plaintiffs represented by different law firms have filed complaints against PG&E in San Francisco Superior Court saying they lost their property because PG&E negligently maintained its power lines.
PG&E has filed two reports so far, one with state regulators, and another with the SEC, that place the integrity of its power lines before the fire into question.
The company notified state regulators on November 8, the day the fire broke out, that a high-voltage transmission line experienced an outage at 6:15 a.m., 18 minutes before CalFire says the Camp Fire began.
According to the Associated Press, a PG&E customer who lives near the origin point of the fire reported receipt of an email from PG&E a day before the fire notifying her that power lines near or on her property were having trouble with sparks.
An investigation by California authorities is underway to determine the origin of the fire.
“Because the cause of the fire has not been determined, it is uncertain if PG&E could be liable for any of the damages. In regards to stock prices, PG&E is not speculating or commenting on what factors may or may not be impacting the stock market,” PG&E said in a statement to Yahoo Finance.
Utility customers could be on the hook
A new law signed by California governor Jerry Brown in September permits PG&E to pay for last year’s fire damage liabilities, estimated to be as much as $17 billion, through bonds funded by customer fees. Critics of the measure call it a bailout for PG&E, whose electrical equipment was found to have caused 17 of 21 wildfires in Northern California last year.
The law, which goes into effect on January 1, 2019, applies to 2017 liabilities and potential liabilities incurred in 2019, though does not pertain to liabilities arising from this year’s wildfires.
Fiske said he doesn’t expect PG&E to resort to bankruptcy even if faced with liabilities arising from the current wildfires.
“We know that the law allows for securitization…for pass through, and for PG&E to get creative with their financing,” Fiske said.
Fiske says he’s now inundated with phone calls from wildfire victims from both the Northern and Southern California fires.
Asked whether the bill provides proper compensation for wildfire victims, a spokesperson for Gov. Brown said: “We will let the Governor’s signature of the bill and his comments speak for themselves.” The Governor’s spokesperson pointed to a recent comment from Brown saying, “at the end of the day, it’s the Federal Government, which our taxpayers provide; it’s the state government, which our taxpayers provide; or it’s the utility users that put up a lot of the money or it’s some shareholders.”
Alexis Keenan is a New York-based reporter for Yahoo Finance. She previously produced live news for CNN and MSNBC and is a former litigation attorney.