February 23, 2018
In a mandatory financial disclosure to the Securities and Exchange Commission (SEC), Pacific Gas & Electric Corp. (PG&E) warned that restoration and repair costs resulting from the Northern California wildfires of October 2017 could total in the hundreds of millions of dollars. This estimate does not include potential court-imposed damages should PG&E be found liable for causing one or more of the fires.
In a Form 8-K filing updating investors as to material financial risks to the company, the California utility giant stated that restoring its facilities alone after damage caused by the fires is likely to cost somewhere in the neighborhood of $170 million to $200 million, of which approximately $70 million to $80 million would consist of capital expenditures. PG&E contends that most these costs are recoverable through the Catastrophic Event Memorandum Account (CEMA), though such reimbursement requires approval by the California Public Utilities Commission (CPUC), which is not a certainty.
In addition to these possibly reimbursable facility repair costs, however, PG&E potentially faces an even bigger financial hit from lawsuits being filed against it by local municipalities and individual victims of the catastrophic Northern California fires. As PG&E discloses in its filing, “If the Company’s facilities, such as its electric distribution and transmission lines, are determined to be the cause of one or more fires, and the theory of inverse condemnation applies, the Company could be liable for property damage, interest, and attorneys’ fees without having been found liable.” In addition, PG&E could be held liable for costs associated with firefighting, evacuations, medical care, and personal injury, and—should there be a finding of negligence on the part of the company—PG&E could face significant fines from utility regulators such as the CPUC.
The theory of inverse condemnation has been applied by courts to hold utility companies liable for the harm caused to individual property owners even where no negligence was found on the part of the utility companies. The theory is based on the idea that the community rather than the individual should bear the cost of certain catastrophes, and large public utility companies are best situated to absorb the costs while spreading them across the broader population in the form of rate hikes.
Did you or someone you know suffer property damage or personal injury as a result of the Northern California fires? Contact the expert attorneys at TheLawFirm.com now for a free consultation.
United States Securities and Exchange Commission (SEC)PG&E Form 8-K