PG&E takes $2.5 billion charge related to California wildfires

(Reuters) - PG&E Corp PCG.N will record $2.5 billion in pre-tax expenses in the second quarter related to wildfires in California, the electric utility said on Thursday, two weeks after state officials blamed its power lines for sparking the fires.

Wall Street analysts said PG&E’s initial estimate for charges related to the fires that killed 46 people last fall was within expectations and not as high as some investors had feared.

Shares of California’s biggest utility - which have fallen more than 40 percent since the fires broke in October - climbed 2 percent on Thursday afternoon.

PG&E has received some 200 complaints related to the fires on behalf of at least 2,700 plaintiffs, and could be the subject of related investigations, it said in a regulatory filing here.

Lawmakers have said that Pacific Gas & Electric was considering bankruptcy protection if it faces large penalties because of the wildfires, according to local media reports here.

PG&E said the total wildfire-related charges it could incur could be greater than $2.5 billion. The utility did not have access to evidence collected by fire department officials, it added.

California fire department officials said earlier this month its investigators had found “evidence of alleged violations of state law” by Pacific Gas & Electric.

Investors were expecting the San Francisco-based utility company to disclose a much higher liability, Morningstar analyst Travis Miller said, without specifying exact figures.

Analysts at Guggenheim Partners and Mizuho Securities estimate that final liabilities could total more than $8 billion.

PG&E will not need to raise money at the moment to cover potential charges, Chief Financial Officer Jason Wells said on a conference call with analysts.

The utility is reviewing the evidence around the causes of the wildfires, it said, adding that it expects to receive $375 million from insurers in the second quarter ending June 30.

The wildfires that swept northern California’s wine country were the deadliest in the state’s history, scorching at least 245,000 acres (99,148 hectares) and incinerating 8,900 homes and other structures.

Reporting by Parikshit Mishra in Bengaluru