Pacific Gas & Electric Co.’s stock took a dive Thursday, Dec. 21, after the utility company announced it will suspend quarterly cash dividends on its common stock, citing uncertainty over potential liabilities associated with the October wildfires in Northern California.
The suspension will take effect this quarter, the company said. It will also suspend dividends paid out on company’s preferred stock, beginning with the three-month period ending Jan. 31, 2018.
PG&E’s stock was trading at $43.19 about 8:40 a.m. Pacific Time on Dec. 21. That was down 15.5% on the day and down 37.3% from its closing price Oct. 6, the last trading day before the fires began.
Although investigators have not determined the cause of the October fires, which swept through Northern California destroying or damaging some 14,000 homes and inflicting more than $3 billion in losses, power lines and electrical equipment are a leading cause of California wildfires, and courts have been known to hold utility companies liable for damages.
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Regulators in the past have hit the state’s investor-owned utilities with tens of millions of dollars in fines related to wildfires. Southern California Edison faced a $37 million penalty related to the 2007 Malibu Fire; San Diego Gas & Electric, $14.4 million related to the Witch, Rice and Guejito fires the same year; PG&E, $8.3 million related to the 2015 Butte Fire.
PG&E Chairman Richard Kelly said in a statement that given the uncertainty over whether PG&E will be held liable for October’s fires, suspending cash dividends is “prudent with respect to cash conservation, and is in the best long-term interests of the companies, our customers and our shareholders.”
PG&E owns Diablo Canyon nuclear power plant near Avila Beach.