PG&E could recoup $150M in losses from Zogg Fire from state fund

Representatives of Pacific Gas & Electric Co. said in a regulatory filing on Monday the company expects a $1.15 billion loss due to the Dixie wildfire. Under a law passed in 2019, the utility could recoup annual losses above $1 billion from a state fund, provided it meets other conditions.

Investigators, including an arborist employed by the utility, have said the Dixie Fire started when a rotten tree fell on a PG&E power line in July. The blaze burned more than 963,000 acres across five counties over three months. It was the second largest fire in state history, and the largest caused by a single ignition.

The quarterly report to the Securities and Exchange Commission also said the company received a subpoena from the U.S. Attorney’s Office for the Eastern District of California on Oct. 7 seeking documents about the fire

The losses are expected to come from damage claims because of the fire’s interruption of timber operations and other business losses, as well as from owners of 1,300 structures that burned down. They exclude hundreds of millions of dollars in costs to fight the fire.

Under AB 1054, the company could access a $21 billion state wildfire fund “after it has paid substantially all third-party liability claims arising from the covered wildfire.” The company could only claim the estimated $150 million if it can show “the conduct of the electrical corporation related to the ignition was consistent with actions that a reasonable utility would have undertaken in good faith under similar circumstances.” In April, the California’s Public Utilities Commission certified PG&E as a “safe” utility, a prerequisite for accessing the fund.

According to an annual report the California Wildfire Fund issued in July, the fund didn’t make any payouts during 2020. Even though this was one of the most destructive fire seasons in state history, “a relatively small percentage of the destruction” was caused by utilities, with no utility making claims for this money.

However, in March, Cal Fire found the 2020 Zogg Fire was started because of PG&E equipment. This means PG&E might tap the fund if damages from that fire top $1 billion. PG&E has been paying $192.6 million annually into the fund, according to the report.