PG&E Corporation PCG 1.79% shares are down 11 percent on Friday after reports have surfaced claiming downed power lines may be responsible for starting the devastating wild fires in Northern California. Investors are majorly concerned about potential liability for the fires.
An 11 percent move in a utility stock is a rarity, and moves this large only happen in extreme circumstances.
Reports Link PG&E To Blaze
Pacific Gas and Electric’s stock began its sell-off on Thursday after the San Jose Mercury Newsreported a potential link between the fires and downed power lines and questioning PG&E’s equipment maintenance in the area. In response to the report, PG&E issued a statement calling the accusations “highly speculative.”
PG&E also claimed that at least 10 reports of downed power lines and exploding transformers in the area were in part due to “hurricane strength winds in excess of 75 mph in some cases.”
Troubling Track Record
“This is classic PG&E — trying to spin things without first taking a look at the hard facts,” said Burlingame attorney Frank Pitre. “The winds were well within the threshold of design standards. If they failed, this was a failure in their system.”
This isn’t the first time PG&E has dealt with disasters.
Pitre has sued PG&E once before for its role in the Butte Fire in 2015. PG&E ended up paying an $8.3 million fine to the Public Utilities Commission and $90 million to Cal Fire to cover firefighting costs.
The market seems to be taking the reports seriously, but Mizuho came out on Friday morning saying there is no evidence suggesting a link between PG&E and the current fires.
Rumor Extinguished?
Shortly after the Mizuho note came out, PG&E stock started to bounce off its low of the day, jumping from $56.32 to $60.37. However, the rally stalled at that level and the stock has been drifting downward ever since.
From a technical perspective, the stock may have found support at the $56 level that represents its lows from October, November and December of 2016. However, the stock will likely be trading only based on how the wildfire story plays out in the coming days.
As of Friday morning, authorities had given no indication of a definitive cause of the fire. If…
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