What happened

Shares of California electric company PG&E Corporation (PCG -0.57%) had their best day in many days -- possibly their best day ever, judging from the stock chart -- on Thursday. The California Department of Forestry and Fire Protection said late today that, in its opinion, PG&E was not responsible for the October 2017 Tubbs Fire in California that razed portions of Sonoma and Napa Counties and killed 22 people. Rather, it seems "a private electrical system" was to blame.

Investors, who had been worrying that PG&E was about to go bankrupt until minutes earlier, turned their fears into cheers -- and sent PG&E stock up more than 80%. (The stock later closed up a still mighty 74.6%.)

Power lines crossing a field.

Who would have guessed that stories about electrical power lines could be so exciting? Image source: Getty Images.

So what

But here's the thing: PG&E still could go bankrupt.

Sure, getting let off the hook on Tubbs is certainly good news. Last year, estimates of PG&E's potential liability for that fire have ranged from just a bit over $1 billion to as much as $8 billion. And yet, most analysts were recently saying that PG&E's total liability for wildfires that it might (or as it turns out, might not) have been liable for over the last couple of years could surpass $30 billion. Max out the Tubbs liability and subtract the Tubbs liability from total liability -- and we're still talking upwards of $22 billion in potential liability for PG&E.

And PG&E still has only about $430 million in the bank.

Now what

Don't get me wrong: Today's news is good news for PG&E shareholders. If nothing else, the California Department of Forestry and Fire Protection's announcement reminds us that until the lawyers have had their day in court, nothing's certain -- multibillion-dollar wrongful death and property damage verdicts included.

But even so, PG&E's potential liability still appears to outweigh its cash reserves, its insurance coverage, and its market capitalization, combined. Bankruptcy remains a risk, as does the potential for PG&E shareholders to end up with nothing on the other side of Chapter 11.

Stay tuned.

Check out the latest PG&E earnings call transcript.