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What's Going On With PG&E's Power Shut-Offs?

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What's Going On With PG&E's Power Shut-Offs?

For the second time this week, PG&E Corporation (NYSE: PCG) has shut off power to thousands of California residents as a precautionary move to prevent possible wildfires given what it says are dangerous weather conditions.

What Happened?

On Wednesday, PG&E announced it has shut off power to 48,200 residents living in parts of Butte, Napa, Nevada, Placer, Plumas, Sonoma and Yuba counties in California. The latest shutdown comes after PG&E performed a similar shutdown impacting 24,000 residents earlier this week.

“This PSPS decision was based on forecasts of dry, hot and windy weather including potential fire risk,” PG&E said in a press release. The company also said it will begin inspecting for potentially damaged equipment once high winds die down, which is expected to occur at around noon on Wednesday.

Why It’s Important

PG&E and fellow California utility Edison International (NYSE: EIX) appear to be taking aggressive preventative measures following a series of deadly and costly wildfires in California in recent years. Edison said this week it was considering a public safety power shutdown for more than 150,000 residents given the strong winds and dry conditions.

The new power shutdowns are allowed by law since May, when the state passed a new set of regulations related to wildfire safety.

PG&E agreed to an $11 billion settlement with insurance companies earlier this month related to the 2018 Camp Fire and other smaller fires in the past two years.

Benzinga’s Take

PG&E shares are down 7.1% in the past week, but it’s unclear whether or not that sell-off is related to the shutdowns or the recent settlements. For now, the long-term outlook for PG&E hinges on the terms and timeline of its bankruptcy proceedings, the size of its liability settlements and the amount of dilutive capital the company will have to raise to get through the process.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Related Links:

PG&E Shares Tank After New Bankruptcy Rulings

Expert Take On PG&E Equity Offering, Bankruptcy Outlook

Photo credit: Frank Deanrdo, Flickr

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