An insurance risk consultant has pegged financial damages from the Camp Fire at $7.5 billion to $10 billion, as a Democratic assemblyman prepares legislation that could provide additional protection for beleaguered utility PG&E Corp. from some of the potential liabilities.
RMS, a risk and analytics firm based in the East Bay, said the cost estimate for the devastating Butte County fire includes damages to property and vehicles, business-interruption expenses and the costs of housing the tens of thousands of evacuees.
The firm’s estimate provides further indication that the Camp Fire will rank among the costliest fires in the state’s history. The insured costs from last year’s costliest wine country fires totalled $9.5 billion, according to the state Department of Insurance.
The Camp Fire has killed at least 84 people and destroyed much of the town of Paradise. Cal Fire says 13,503 homes have been destroyed, along with 514 commercial buildings. More than 50,000 people were initially evacuated, although some people have been allowed to return home.
Assemblyman Chris Holden, D-Pasadena, chairman of the Utilities and Energy Committee, is preparing to introduce legislation that would extend financial protections for PG&E and other utilities beyond what was provided in SB 901, which was signed into law in September by Gov. Jerry Brown.
Among other things, the law says the Public Utilities Commission must take into account the company’s financial state when deciding how much of the costs must be shouldered by ratepayers, as opposed to the utility’s shareholders. But that provision only applies to the 2017 fires.
Kellie Smith, a consultant for Holden, said Wednesday that the assemblyman wants that “stress test” protection to be extended to 2018 fires.
PG&E’s potential liability from the Camp Fire has raised the specter that the utility could be forced into bankruptcy. That would trigger higher borrowing costs and other expenses that would ultimately be borne by ratepayers, Smith said. Providing protection through legislation, and preventing a bankruptcy, is “the least expensive choice of a lot of bad choices,” she said.
Holden’s bill is sure to be controversial. State Sen. Jerry Hill, D-San Mateo, told the San Jose Mercury News that the legislation represents “a happy Thanksgiving gift” for the utility’s shareholders, directors and executives.
And state Sen. Jim Nielsen and Assemblyman James Gallagher, two Republicans who represent the Butte County area, issued a joint statement Wednesday saying it’s too soon to discuss relief for PG&E.
“There will be time in the weeks and months ahead to discuss policy proposals ensuring accountability and the future viability of utilities in California,” they said. “But to do so now is irresponsible and premature. The fire has yet to be contained, 870 people remain unaccounted for, and the deceased have yet to be identified.”
Andrea Menniti, spokeswoman for PG&E, told the Mercury News that the utility “is solely focused on helping the first responders and helping our customers recover and rebuild.”
The company filed for bankruptcy in 2001, when its finances were bled dry during the energy crisis.
PG&E’s stock price has plummeted after the utility disclosed that a high-voltage transmission line experienced a problem in the area where the Camp Fire started, just minutes before the first flames were reported Nov. 8. Soon after, PG&E told the Securities and Exchange Commission that it might not have enough liability insurance to cover potential costs from the fire.
The cause of the fire remains undetermined, however.
The company’s stock price has stabilized in recent days, and rose 86 cents, to $24.38, in morning trading Wednesday on the New York Stock Exchange.