California utility goes for ‘cash conservation.’ Investors, not just rate payers, to foot the bill. Wednesday evening, two sleepy trading days before the long Christmas weekend, when no one was supposed to pay attention, Pacific Gas and Electric, the Northern California utility that is being investigated and sued for allegedly having triggered the wildfires in the Bay Area, ‘the most destructive and deadliest in our state’s history,’ as the Department of Insurance had put it, announced that it would suspend its dividend.
PG&E shares [PCG] plunged 10% in after-hours trading. Thursday morning, shares plummeted 16.5% to $42.75. They’re now down 38% in total since the beginning of the wildfires that killed 43 people and caused still untold property and environmental damage, including $9 billion in insurance claims so far, with the tally likely to rise further. About three dozen lawsuits have been filed against PG&E.
PG&E’s announcement was terse:
On December 20, 2017, the Boards of Directors of PG&E Corporation (the ‘Corporation’) and its subsidiary, Pacific Gas and Electric Company (the ‘Utility’), determined to suspend quarterly cash dividends on both the Corporation’s common stock, beginning with the fourth quarter of 2017, and the Utility’s preferred stock, beginning with the three-month period ending January 31, 2018, due to uncertainty related to causes and potential liabilities associated with the extraordinary October 2017 Northern California wildfires.
This post was published at Wolf Street on Dec 21, 2017.
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