PG&E expects $1.15 billion loss from the Dixie Fire

PG&E expects to take a $1.15 billion hit from the Dixie Fire, a massive blaze that burned through Northern California for months, destroying nearly 1 million acres, the utility’s executives said on an earnings call Monday.

The company also disclosed that it received a subpoena last month from the U.S. attorney’s office for the Eastern District of California in connection with the wildfire. Though the cause of the Dixie Fire remains under investigation, PG&E has told state regulators it may have been sparked when blown fuses lit up a tree leaning against one of the company’s power lines on July 13.

That morning around 7 a.m., PG&E’s outage system showed that the area of Cresta Dam in Butte County’s Feather River Canyon had lost power. But it wasn’t until around 4:40 p.m. that a utility worker arrived at the pole and discovered a tree had fallen on the line, along with two blown fuses and a fire at the base of the pole.

Over the next three months, the fire ballooned into the second-largest in California state history, ultimately consuming 963,309 acres before it was fully contained on Oct. 25.

“We were challenged by the Dixie Fire and the impact the fire had on all of our customers,” said CEO Patti Poppe, while adding “our actions around Dixie were those of a reasonable operator.”

The $1.15 billion estimate is on the “lower end” of the total potential cost as claims grow, executives said in a call with investors Monday, even as they insisted that PG&E — which emerged from Chapter 11 bankruptcy last year after its equipment sparked multiple deadly wildfires — behaved appropriately. Since emerging from bankruptcy, PG&E has said it may have played a role in starting several other wildfires, and has been charged with involuntary manslaughter and multiple other crimes in connection with the 2020 Zogg Fire that killed four people in Shasta County.

The company incurred a $1.09 billion third-quarter loss because of bankruptcy costs, state-mandated contributions to a wildfire-insurance fund, prior fire-season damages and other costs, according to an earnings statement Monday. Adjusting for those extraordinary costs, profit rose to 24 cents a share from 22 cents a year earlier, according to the statement.

The Dixie Fire destroyed or damaged 1,424 structures, most notably leveling a strip of businesses and homes leveled in Greenville, effectively burning through the entire commercial district of the town, located along Highway 89 in Plumas County. During the earnings call, executive vice president and chief financial officer Chris Foster alluded to that damage when an investor representative asked him to explain the $1.15 billion estimate.

“There’s an element of a commercial area or downtown area impacted, so there’s some focus on business interruption,” Foster said, noting that the fire also may have affected timber operations in the region. “When you stack those all on top of each other, you get to the point where we get in terms of those private claims.”

PG&E has so far received claims across a handful of courts on behalf of at least 676 plaintiffs claiming negligence, economic loss and property damage from the wildfire, filings show.

The fire is one of a handful that the utility has been linked to this summer, including the Fly Fire in Plumas County and the Blue Fire in Fresno. In past years, its equipment has sparked multiple devastating blazes, including fatal fires in Amador County and Calaveras County in 2015, the North Bay in 2017, and the 2018 Camp Fire, which killed 86 people and destroyed the town of Paradise.

Three days after it reported that its line may have sparked the Dixie Fire, the utility announced plans to eventually put 10,000 miles of California power lines underground — but provided few details about the project’s timeline or cost aside from acknowledging that ratepayers are likely to foot the bill.

During Monday’s call, executives deflected questions from investor representatives about specific undergrounding plans. By the end of the year, the utility will only have only undergrounded about 100 miles worth of lines, Poppe confirmed, but said that they were meeting with a handful of construction and engineering firms to continue the work, and will share more details next year as part of the utility’s next round of wildfire mitigation planning.

“All the feedback we’re getting from people is they do want more information … knowing what we know and what we can see moving forward, we’re very confident that as people see the numbers and the plan, they’ll feel very excited just like we do,” Poppe said.

PG&E shares fell 2.5% to $11.31 Monday, and have declined 9.2% this year.

Bloomberg contributed to this report. 

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