PG&E Profits Plummet Amid Bankruptcy, and SEC Probe Adds to Utility's Troubles

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PG&E says its profits are down due to wildfire liability and bankruptcy. (Justin Sullivan/Getty Images)

PG&E reported a dramatic drop in profits Thursday in the company's most recent quarterly earnings report for investors.

Profits fell to $136 million in the first quarter of 2019, down from $442 million during the same period last year.

The utility blamed the hit to its bottom line on several factors, including legal costs stemming from the 2017 North Bay fires and the 2018 Camp Fire in Butte County, and the utility's ongoing bankruptcy. The company filed for Chapter 11 in January.

Also, the company revealed in a different regulatory filing late Thursday afternoon that it is being investigated by the U.S. Securities and Exchange Commission. The SEC is probing whether the utility properly disclosed and accounted for losses related to wildfires.

PG&E declined to comment on the SEC investigation.

Profits Could Continue to Plunge

Some analysts believe the costs reflected in PG&E's latest financial results aren't likely to subside in the near term.

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"We certainly are not seeing the full impact of the liability that is likely to fall on PG&E from the fires. That is going to be manyfold larger than the numbers we're talking about here," said Severin Borenstein, professor at UC  Berkeley's Haas School of Business and director of the Energy Institute at Haas.

But he also said that the company is in a different place than during its first bankruptcy in 2001.

This time, "PG&E is still making money day to day, and I think that distinction is important," Borenstein said.

New CEO Starts

The earnings release comes on the same day that Bill Johnson takes over as PG&E's CEO. Johnson spent the previous six years at the Tennessee Valley Authority.

Johnson responded to the earnings results in a press release.

"As we position PG&E for the long-term, we are continuing to implement programs that will make the communities we serve safer in the face of extreme weather and wildfire risk, while also recognizing that significant work remains to be done as our state collectively confronts the coming wildfire season and the challenges of climate change," Johnson said.

Shares of the PG&E Corp. fell more than 3 percent on Thursday, settling at $20.96 by the close of markets.

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