Shares of troubled California utility PG&E (NYSE:PCG) climbed 14.9% on Thursday, following a report that California's governor was pressing lawmakers on a wildfire fund that could help utilities in the state pay for liabilities that arise from future catastrophic fires.
PG&E filed for bankruptcy protection in late January as part of a plan to deal with upwards of $30 billion in wildfire liabilities stemming from a blaze last fall. The so-called Camp Fire in northern California, which resulted in 85 deaths and massive property damage, was sparked by a PG&E power line.
California Gov. Gavin Newsom in the months since has been pushing for a plan to balance holding PG&E and the state's other utilities responsible for damage they cause and maintaining a stable power grid for citizens of the state. Newsom, according to a Bloomberg report, is pressing lawmakers to establish a wildfire fund to assist utilities with future liabilities.
The report said that Newsom would like to see the fund seeded by at least $10 billion in Department of Water Resources bonds, with utilities asked to contribute upwards of $7.5 billion in equity. The bonds would be backed by a charge that utility customers have been paying since the early 2000s.
As part of the plan, Newsom is also seeking regulatory changes that would allow utilities to more easily recover the costs of wildfire damages from ratepayers.
Wildfires remain a major risk for PG&E, so it's no surprise that shares got a boost from the proposal. But it's worth noting that the legislation is far from approved, and even if it is, it would handle only future liabilities and not the current ones stemming from last year's fires.
This would be a step in the right direction for PG&E, but the company still has considerable challenges ahead.