PG&E wildfire probes, liability fears, may haunt utility for months, says analyst

San Jose Mercury News (CA)

Oct. 17--Regulatory and fire agency probes into what caused the Wine Country wildfires could loom over PG&E for months, an analyst warned Tuesday, despite a rally in the utility's shares for the first time in several days.

The cause of the fires remains unknown, but state regulators have ordered the PG&E electricity and natural gas utility as well as several telecommunications companies to preserve evidence of any potential links the companies' infrastructure might have to the deadly fires.

Meanwhile, PG&E's seesaw trading may continue for some time, said Paul Patterson, an analyst with investment firm Glenrock Equities.

"Given how much the stock had gone down, it's not surprising PG&E would eventually pop," Patterson said. "But expect a lot of volatility for a while."

PG&E's shares jumped 7.5 percent to close at $57.44 on Tuesday, after three days of heavy selling of the utility's stock.

Despite the turnaround, the company's shares remained down about 17 percent since last Wednesday. Prior to Tuesday's rally, investors had jettisoned PG&E shares after turning queasy about the company's possible financial and regulatory liabilities in the wake of the infernos, which have killed dozens of people and scorched homes, businesses, wineries and wild lands.

The safety division of the state Public Utilities Commission has launched a preliminary review into whether PG&E might have played a role in triggering the disaster. Cal Fire also is looking into the cause of the blazes that tore through the North Bay's Wine Country and nearby regions.

"This could hang over PG&E for months," Patterson said. "These kinds of investigations can go on for a while."

Wells Fargo and JP Morgan analysts have downgraded their target prices for PG&E's stock since the wildfires broke out.

At present, the PUC's Safety and Enforcement Division is primarily focused on working with Cal Fire on incident response and other issues, said Christopher Chow, a PUC spokesman.

"This includes examining PG&E's response to the fires, and collecting information about maintenance history and vegetation management in the fire areas," Chow said. "We will conduct in-depth investigations following the fires if utility involvement is suspected."

The prospect of an official PUC probe into PG&E has triggered echoes of the utility's role in causing a fatal explosion on the Peninsula in September 2010, when a PG&E natural gas pipeline ruptured and unleashed a fireball that killed eight and destroyed a neighborhood in San Bruno.

Federal investigators determined that a lethal combination of PG&E's shoddy maintenance and flawed record keeping were the principal causes of the San Bruno disaster. But the investigators also blamed the PUC's cozy ties to PG&E and its lax oversight of the utility, one of a series of disclosures that have called into question the state agency's ability to properly supervise California's big power utilities.

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