Shares of electric utility PG&E (NYSE: PCG) sank Thursday after suspending its dividend, citing uncertainty regarding its liability in the deadly October wildfires in Northern California.
"No causes have yet been determined for any of the unprecedented wildfires, which continue to be the subject of ongoing investigations," PG&E said in a statement Wednesday after the close. "However, California is one of the only states in the country in which courts have applied inverse condemnation to events caused by utility equipment."
The San Francisco-based company said that if its "equipment is found to have been a substantial cause of the damage in an event such as a wildfire — even if the utility has followed established inspection and safety rules — the utility may still be liable for property damages and attorneys' fees associated with that event."
The October wildfires in the state's wine country region caused more than $9.4 billion in residential and commercial claims, officials announced earlier this month. The fires left destruction and damage to more than 21,000 homes, 2,800 businesses, and more than 6,100 vehicles. Also, there were 44 fatalities from the fire.
According to PG&E Corporate Chair Richard Kelly, "After extensive consideration and in light of the uncertainty associated with the causes and potential liabilities associated with these wildfires as well as state policy uncertainties, the PG&E boards determined that suspending the common and preferred stock dividends is prudent with respect to cash conservation and is in the best long-term interests of the companies, our customers and our shareholders.”
Shares in the utility took a header, $8.74, or 17.1%, to $42.26.
