Pacific Gas and Electric Having a Very Bad Day

As Bad As It Gets? PG&E Cuts Dividend, Tumbles 16% -- Barron's Blog

12:50 pm ET December 21, 2017 (Dow Jones) Print

By Andrew Bary 

A sharp drop today in shares of PG&E, the big California electric utility, could present a buying opportunity after the company surprised investors by suspending its quarterly dividend. The company did so because of the potential legal liability for October wildfires in Northern California that has resulted in insurance claims for property losses of $9.4 billion. 

Shares of PG&E ( PCG) are down $8.17 to $42.95, or 16%, following the announcement of the dividend suspension that begins in the current quarter. It had been paying a quarterly dividend of 53 cents a share. 

The stock is down 38% since Oct. 11, the day before the fires. That has cut more than $13 billion from the company's market value. "We continue to believe that, at its current price, PG&E stock capitalizes a worst-case scenario with respect to PG&E's liability for property damages, and presumed inability to recover these costs from ratepayers," wrote analyst Hugh Wynne of Sector & Sovereign Research of Connecticut in a client note this morning. "Less adverse outcomes therefore offer material upside," he wrote. 

By his calculation, PG&E stock now discounts around $17 billion of pre-tax, pre-insurance losses. The total insurance claims, by contrast, are $9.4 billion through November. There could be an additional $1 billion in claims from public entities. 

"The implication is that the market expects no recovery of these property damages by PG&E from ratepayers, and for PG&E to incur a further $6.3 billion of pre-tax costs due to legal costs, fines imposed by the California Public Utility Commission, personal injury claims, consequential damages or punitive damages," Wynne wrote. He has an Outperform rating on the stock. 

The shares now trade for just 12 times projected 2017 earnings, a sharp discount to the sector, which commands about 20 times earnings. PG&E could be liable for damages caused by the fires under a legal doctrine called inverse condemnation. 

This is how the company explained it in a press release late Wednesday announcing the dividend suspension: 

No causes have yet been identified for any of the unprecedented wildfires, which continue to be the subject of ongoing investigations. However, California is one of the only states in the country in which courts have applied inverse condemnation to events caused by utility equipment. This means that if a utility's 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. 

"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," said PG&E Corporation Chair of the Board Richard C. Kelly. "We fully recognize the importance of dividends and intend to revisit the issue as we get more clarity." 

The company said it planned to work with the state to address the negative "investment environment" caused by state law on inverse condemnation. 

Shares of another California utility, Edison International ( EIX), are down $4.63, or 7%, today to $63.67 and have fallen 20% since Southern California wildfires broke out earlier this month amid concerns about its legal liability under inverse condemnation. Edison shares hit a new 52-week low today and did those of PG&E. The Utilities Select Sector SPDR ETF ( XLU) has slumped fallen 1.1% to $52.40. 

More at Barron's Stocks to Watch blog, http://www.barrons.com/stocks-to-watch 

(END) Dow Jones Newswires

Edison International under fire

A Second Utility Giant Loses Billions as Wildfires Rage

By 

Mark Chediak

December 5, 2017, 9:48 AM CST Updated on December 6, 2017, 9:10 AM CST

• Some utility customers may be without power for next few days
• Under California law, utilities can end up footing bill

California Fires Halt Filming, Send Edison Plunging

California Fires Halt Filming, Send Edison Plunging

Once again, thousands are fleeing wildfires in California. And, once again, the worry on Wall Street is that a major electric utility might end up on the hook for the damages.

Shares of Edison International resumed declines on Wednesday, a day after their biggest slump in 15 years wiped out more than $3 billion in market value. A fast-moving firefanned by high winds in Southern California’s Ventura and Santa Barbara counties charred 50,000 acres of land, burned hundreds of homes and damaged citrus crops. 

Authorities haven’t cited a cause. But, as with the conflagrations in the state’s famed wine country in October, stock-market investors are worried downed power lines may have played a role in sparking the flames. Under a controversial rule known as “inverse condemnation,” utilities are liable for property damage if their equipment is found to have contributed. In Northern California, similar speculation is centered on PG&E Corp., which has said it’s too soon to pinpoint a cause. Edison said it had no indication its equipment was the source of the latest fires.

“This is like catching a falling knife,” Shahriar Pourreza, an analyst for Guggenheim Securities, said of the stock slide. “Anyone who tells you this is an overreaction really has no idea about the state and what is happening there.”

Edison’s Southern California Edison unit warned that some customers should be prepared to go without electricity for the next few days because of fire damage while transmission lines face further threats. California Governor Jerry Brown declared a state of emergency in Ventura County after hundreds of homes and other structures were destroyed and tens of thousands of residents evacuated.

PG&E lost more than $7 billion in market value after state investigators said they were looking at the San Francisco-based utility’s equipment as a possible cause of deadly fires that tore through wine country.

Edison fell as much as 3.1 percent on Wednesday and traded at $68.75 as of 9:55 a.m. in New York. The stock slid 13 percent on Tuesday, its worst performance since October 2002. 

In an early morning update, the company said more than 14,000 of its customers were experiencing outages. Those numbers could change depending on wind and fire conditions through the week.

Based on the apparent origin of the fires and the performance of its system, Southern California Edison said Tuesday it had no indication its equipment was a source. In a statement, the company said the state fire service would be carrying out an investigation.

Denied Request

Under California law, utilities can ask regulators to spread the costs of wildfires to customers. Last month, however, California regulators denied a request by San Diego Gas & Electric to bill customers for expenses related to a decade-old wildfire.

“Based on our initial read of the facts, we expect Edison to absorb any financial implications of this fire, and view the significant stock price drop as an overreaction,’’ SunTrust Robinson Humphrey Inc. wrote in a note Tuesday. “However, we acknowledge that facts are still developing in the case, and the issue could remain an overhang for a while.’’

The fire-stoking winds whipping Southern California will last into Thursday, according to the National Weather Service.

— With assistance by Brian K Sullivan

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Stubbed Toe

I got up at night and stubbed my toe.  I turned on the light and was surprised to see how much damage there was.  The toenail on my big toe was broken all the way through half way down from one side to the other.  Half of it had actually come completely off.  What to do?  

What I actually did was to go back to sleep.  I put a bandaid on it and thought about how I could avoid this.  It probably wouldn't have happened if I were wearing slippers, which I will be in the future.  Once I can get slippers on.  It probably wouldn't have happened if I had had a nightlight.  It's not the first time I've had an accident in the dark.  That's just asking for trouble.  

I told a friend about it, and she gave me a cute little flashlight for walking around in the dark.  Yay!  

What about missing toenails?   I bought Krazy glue and a set of false toenails.  I'm going to glue my poor toenail back together, and then put beautiful false toenails on my toes until this storm passes. 

John 12

John 12  Written from memory

1. Then Jesus six days before the passover came to Bethany, where Lazarus was which had been raised from the dead, whom he raised from the dead.  

2. There they made him a supper, and Martha served, but Lazarus was one of them that sat at the table with him. 

3. Then took Mary a pound of ointment of spikenard, very costly, and anointed the feet of Jesus, and wiped his feet with her hair, and the house was filled with the odour of the ointment.  

4. Then saith one of his disciples, Judas Iscariot, Simon's son, which should betray him, 

5. Why was not this ointment sold for three hundred pence and given to the poor? 

6. This he said, not that he cared for the poor, but because he was a thief, and had the bag, and bare what was put therein.  

7. Then said Jesus, Let her alone; for against the day of my burying hath she kept this. 

8. For the poor always ye have with you, but me ye have not always. 

9. Much people of the Jews therefore knew that he was there, and they came, not for Jesus' sake only, but that they might see Lazarus also, whom he had raised from the dead. 

10. But the chief priests consulted that they might put Lazarus also to death,

11. Because that by reason of him many of the Jews went away, and believed on Jesus. 

12. On the next day, much people that were come for the feast, when they heard that Jesus was coming to Jerusalem, 

13. Took branches of palm trees, and went forth to meet him and cried, Hosanna, Blessed is the King of Israel, that cometh in the name of the Lord. 

14. And Jesus, when he had found a young ass, sat thereon, as it is written, 

15. Fear not, daughter of Sion, behold thy King cometh, sitting on an ass's colt. 

16. These things understood not his disciples at the first, but when he was glorified, then remembered they that these things were written of him and that they had done these things unto him.  

17. The people therefore that was with him when he called Lazarus out of his grave, and raised him from the dead, bare record.  

18. For this cause, the people also met him, for that they heard that he had done this miracle.  

19. The Pharisees therefore said among themselves, Perceive ye how ye prevail nothing? Behold, the world is gone after him. 

20. And there were certain Greeks among them that came up to worship at the feast.  

21. The same came therefore to Phillip, which was of Bethsaida, of Galilee, and desired him, saying, Sir, we would see Jesus.  

22.  Phillip cometh and telleth Andrew, and again Andrew and Phillip tell Jesus. 

23. And Jesus answered them saying, The hour is come that the Son of man should be glorified.  

24. Verily, verily, I say unto you, except a corn of wheat fall into the ground and die, it abideth alone, but if it die, it bringeth forth much fruit. 

25. He that loveth his life shall lose it, and he that hateth his life in this world shall keep it unto life eternal.  

26. If any man serve me, let him follow me, and where I am, there shall also my servant be. If any man serve me, him will my Father honour.  

27. Now is my soul troubled. And what shall I say, Father save me from this hour.  But for this cause came I unto this hour. 

28. Father, glorify thy name.  Then came there a voice from heaven, saying, I have both glorified it, and will glorify it again.  

29. The people therefore that stood by, and heard it, said that it thundered.  Others said, An angel spake to him. 

30. Jesus answered and said, This voice came not because of me, but for your sakes. 

31. Now is the judgment of this world. Now shall the prince of this world be cast out.  

32. And I, if I be lifted up from the earth, will draw all men unto me. 

33. This he said signifying what death he should die. 

34. The people answered him, We have heard out of the law that Christ abideth for ever.  And how sayest thou, The Son of man must be lifted up? Who is this Son of man?  

35. Then Jesus said unto them, Yet a little while is the light with you. Walk while ye have the light, lest darkness come upon you, for he that walketh in darkness knoweth not whither he goeth.  

36. While ye have light, believe in the light, that ye may be the children of light.  These things spake Jesus, and departed, and did hide himself from them. 

37. But though he had done so many miracles before them, yet they believed not on him. 

38. That the saying of Esaias the prophet should be fulfilled, which he spake, Lord, who hath believed our report, and to whom hath the arm of the Lord been revealed. 

39. Therefore they could not believe, because that Esaias said again, 

40. He hath blinded their eyes, and hardened their heart, that they should not see with their eyes, nor understand with their heart, and be converted, and I should heal them. 

41. These things said Esaias, when he saw his glory and spake of him. 

42. Nevertheless among the chief rulers also many believed on him, but because of the Pharisees they did not confess him, lest they should be put out of the synagogue,  

43. For they loved the praise of men more than the praise of God. 

44.  Jesus cried and said, He that believeth on me, believeth not on me, but on him that sent me, 

45. And he that seeth me seeth him that sent me. 

46. I am a light come into the world, that whosoever believeth on me should not abide in darkness. 

47. And if any man hear my words, and believeth not, I judge not, for I came not to judge the world but to save the world. 

48. He that rejecteth me, and receiveth not my words, hath one that judgeth him, the word that I have spoken, the same shall judge him in the last day. 

49. For I have not spoken of myself, but the Father which sent me, he gave me a commandment, what I should say, and what I should speak.  

50. And I know that his commandment is life everlasting, whatsoever I speak therefore, even as the Father said unto me, so I speak.  

John 12 art