California utility stocks plummeted for a second day on Monday after deadly wildfires killed at least 31 people and left hundreds missing, with property losses estimated at more than US$2-billion and the companies facing potential liability.
PG&E Corp., which operates in the northern part of California, dropped 16 per cent, bringing its loss over two sessions to 29 per cent, equivalent to US$8-billion. Edison International, the owner of Southern California Edison Company, slumped 11 per cent, leaving its stock market value US$5-billion lower since Thursday when the fires broke out.
PG&E was deemed responsible for wildfires in 2017 that ravaged wine country north of the San Francisco Bay area and killed 46 people, and this week’s fires create new uncertainties for investors in California’s utilities.
What is being referred to as the Camp Fire in Northern California, the state’s most destructive blaze on record, had left at least 228 people missing as of early Monday after burning down more than 6,700 homes and businesses in the town of Paradise.
In Southern California, the Woolsey Fire had forced authorities to issue evacuation orders for a quarter million people in Ventura and Los Angeles counties and beachside communities including the Malibu beach colony.
Both utilities reported to regulators in recent days that they experienced problems with transmission lines or substations in areas where fires were reported, just before or close to the time they started.
SunTrust analyst Ali Agha in a note to clients said the sell-off in Edison International was likely overdone because total acres and property burned so far in its territory were smaller than in fires last year. He noted that new legislation could help reduce the potential costs related to possible liability.
The fire in Northern California has probably caused between US$2-billion and US$4-billion in insured property damage, Morgan Stanley estimated in a report on Monday. Shares of insurance companies covering homes and businesses in California also fell, with Allstate Corp., Travelers Companies Inc., Chubb Ltd. and Hartford Financial Services Group Inc. each down more than 1 per cent.
PG&E recorded a US$2.5-billion in pretax expense for the second quarter related to last year’s fires after a report said some of them were sparked by trees toppling into PG&E power lines.
Both utilities said the causes of the current fires have not been determined. PG&E said that, as of Saturday, 25,000 customers were without electricity and that it had turned off gas for another 12,000 customers.
Southern California Edison said 9,500 of its customers were without power owing to the Woolsey Fire in Southern California.
In September, the state passed a bill allowing utilities to pass on to customers some of the costs incurred from liabilities related to wildfires.