If Pacific Gas & Electric formally files for bankruptcy protection, as it is has, it will limp into court with just about a month's worth of cash on hand, according to a securities filing. As of last Friday, the nation's largest utility had $1.5 billion in cash and equivalents on hand, the filing said.
Running the company for the past year has cost $39 million per day -- costs that cover everything from the production of electricity and gas to land leases to employee salaries. PG&E has enough in its coffers to handle 38 days of those expenses.
But the costs it faces are far from regular. It has been implicated in $17 billion of property insurance claims and predicts it could be liable for as much as $30 billion once all the losses are factored in, it said in the filing.
As of last month, $10 billion worth of claims had been filed for the 2018 Camp Fire and $7 billion from the 2017 wildfires, according to the California Department of Insurance. But $17 billion doesn't capture its total liability, the company said. The filing said what's left out is "total potential liability for insured property losses and do not include any uninsured or underinsured property losses or any non-property losses, punitive damages, fines, penalties or damages for claims related to the 2017 and 2018 Northern California wildfires that have not manifested yet."
It also doesn't include any punitive damages that a court might award if it finds that PG&E was negligent in relation to the fires.
Unlike other states, California holds utilities liable for wildfire costs if their equipment was involved in causing the conflagration, without requiring a demonstration of negligence, said Ralph Cavanagh, co-director of the climate and clean energy program at the Natural Resources Defense Council. He called that a "bizarre feature."
"The bankruptcy filing is exclusively driven by the fact that it's strictly liable for all the wildfire damage in its territory," Cavanagh said. Filing for bankruptcy won't eliminate the lawsuits, but it would result in all wildfire claims being consolidated into a single proceeding before a bankruptcy judge, not a jury, according to the Associated Press. That would buy the company time, and it could result in lower payouts to claimants.
The utility had hoped for a reprieve from newly elected Gov. Gavin Newsom, but that might not be possible, Newsom said this week. Regarding a PG&E bankruptcy, he said: "We'd like to see it avoided, but we're not naive."
Wall Street isn't optimistic. Given PG&E's finances, "we do not see a clear path to action that would avoid a bankruptcy filing," Height LLC analysts said on Tuesday. PG&E shares, which traded at just under $50 each on Nov. 7, closed today down a further 17.5 percent at $6.91.