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Why PG&E Stock Just Dropped 10%

By Rich Smith - Oct 24, 2019 at 2:34PM

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Wildfires in California singe PG&E stock once again.

What happened

PG&E Corporation (PCG 0.81%) shares are in retreat once again on Thursday -- down 10% as of 1:55 p.m. EDT. Once again, fire is the reason.

In California, the Kincaid wildfires in Sonoma County have cut power to some 200,000 souls and forced residents to evacuate their homes north of San Francisco. PG&E is responding to the blaze by announcing a "Public Safety Power Shutoff (PSPS) in 15 counties in the Sierra Foothills and North Bay -- Alpine, Amador, Butte, Calaveras, El Dorado, Lake, Mendocino, Napa, Nevada, Placer, Plumas, Sierra, Sonoma, Tehama, and Yuba -- impacting about 178,000 customers in those areas" -- explaining some but not all of the power outages.

Furthermore, PG&E is warning that "it is possible that additional customers not impacted by PSPS may experience power outages due to PG&E equipment damaged during the wind event."

Power lines against a sunset.

Image source: Getty Images.

So what

Is any or all of this really PG&E's fault? It's hard to say, but given the close association between "fire," "PG&E stock," and "lawsuits" in many investors' minds these days, any bad news concerning one of the three seems to quickly spread to affect the other two.

Now what

What's more, there's also a business reason for the pessimism: Power shut off by PG&E is power not sold by PG&E to its customers -- resulting in revenue losses for the company. Until a permanent solution is found to the problem of wildfires periodically incinerating the state, I imagine that PG&E stock is going to be a tough utility to own.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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$11.14 (0.81%) $0.09

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