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PG&E share price collapses amid California fire legal fears

The US-based utility company has seen its share price fall off a cliff as investors grow increasingly concerned that it may be liable for California camp fire.

Pacific Gas & Electric Co. (PG&E) workers repair a transformer in Paradise, California, U.S.
Source: Bloomberg

In the last few days, Pacific Gas and Electric (PG&E) has seen its share price collapse as investors become ever more concerned about the role the company’s equipment potentially played in starting one of the worst wildfires the state of California has ever seen.

On November 7, the utility’s share price stood at $48.80 but has since fallen by more than 30%, with the stock closing at $17.74 a share on Thursday.

PG&E camp fire concerns

On Wednesday, the company said in a regulatory filing that it had drawn down around $3 billion from its credit facilities and informed shareholders that PG&E could end up being liable to pay more than $1.4 billion if its equipment is determined to be the cause of a camp fire in Butte County.

The camp fire that started in Butte County is one of three massive wildfires that have destroyed who swathes of California, claiming nearly 60 people’s lives and burning more than 8,000 homes to the ground in what is the most destructive blazes in the state’s history.

PG&E puts out fires

On Monday, PG&E CEO and President Geisha Williams was in the area to assess the damage first hand and receive an update from company leaders and crews.

‘Right now, our primary focus is on the communities and supporting first responders as they work to contain the fire. We're getting our crews positioned and ready to respond when we get access, so that we can safely restore gas and electricity to our customers,’ Williams said.

‘There are no words to describe the unspeakable tragedy and loss of life… Over the coming days and weeks, we will continue mobilizing our workforce to help these communities recover and rebuild,” she added.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.