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California PG&E Hearing Turns Into Protest Against Utility

Mark Chediak and David R. Baker
California PG&E Hearing Turns Into Protest Against Utility

(Bloomberg) -- Protesters turned a seemingly routine vote to begin calculating PG&E Corp.’s wildfire costs into a rally against the embattled utility Thursday at a California Public Utilities Commission meeting.

Drowned out by cries of “murder,” “perjury” and “manslaughter” from about a dozen protesters, commissioners led by CPUC President Michael Picker unanimously agreed to open proceedings to develop a so-called stress test for utilities’ wildfire costs. The goal is to see how big a financial blow companies like PG&E could withstand and still remain viable.

The stock fell, erasing a rally of as much as 7.7 percent, as the meeting proceeded and then went into closed session without expressions of support for the utility from CPUC commissioners. Shares fell 0.4 percent to $17.76 at the close in New York.

Investors are looking for any signs that state leaders are working to prevent a PG&E bankruptcy in the face of massive costs from deadly wildfires. The commission has been weighing replacing PG&E’s board and management and splitting up the company. PG&E’s shares have dropped 27 percent so far this week amid reports it’s considering filing for bankruptcy protection as early as February and as S&P Global Ratings slashed its credit to junk.

@californiapuc as protesters read off names of people killed in #CaFires while commissioners prepare to move fwd with creating a bankruptcy “stress test” for utilities like PG&E pic.twitter.com/GMgYlXIKdO

— J.D. Morris (@thejdmorris) January 10, 2019

“It wouldn’t surprise me if some people may have been expecting a more encouraging statement, other than what was provided by the commission, which was pretty factual,” Paul Patterson, a utility analyst for Glenrock Associates, said of the share-price move.

Later, at a press conference in Sacramento, California Governor Gavin Newsom said PG&E was at the top of his agenda and that he’ll make a new announcement on this issue within the next few days. He spoke after unveiling the state budget.

“Hey, hey, ho ho, PG&E has got to go,” the protesters shouted in unison at the CPUC meeting in San Francisco. “We the people find PG&E guilty of murder.”

During a public-comment period, speakers overwhelmingly weighed in against a bailout of the troubled utility. Some began reading out the names of people who died in California’s wildfires. PG&E faces as much as $30 billion in liabilities if its equipment is linked to the start of blazes that scorched the state in 2017 and 2018, according to analysts’ estimates.

“The devastating impact of extreme weather is one of the most important issues currently facing the state of California, and the recently enacted law took steps to address several urgent needs,” PG&E spokesman James Noonan said in an emailed statement after the public meeting concluded.

The stress test was part of a law California legislators passed last year to help PG&E deal with the fallout of 2017’s wildfires.

“With respect to the wildfire cost recovery methodology present in the current law,” Noonan said, “we believe all stakeholders can agree there needs to be a timely resolution of the proceeding before the California Public Utilities Commission (CPUC), which will establish a threshold for utilities to pay claims without causing harm to customers, before allowing costs to be recovered through the issuance of bonds.”

(Updates shares in third paragraph and adds Newsom in sixth.)

--With assistance from Romy Varghese.

To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net;David R. Baker in San Francisco at dbaker116@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Margot Habiby, Jeffrey Taylor

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