(Reuters) - The chief of California’s top utilities regulator said on Friday he was “stunned and terrified” to learn that reassurances he made to investors about PG&E (PCG.N) caused the embattled power utility’s stock to surge over 40 percent in a matter of minutes.
PG&E’s stock had nosedived earlier this week on fears that without help from California’s government, the utility could go bankrupt should it eventually be found responsible for the state’s deadliest-ever wildfire. The fire, which erupted a week ago and destroyed the town of Paradise, has killed at least 63 people.
California Public Utilities Commission President Michael Picker told Reuters on Friday that utilities must be able to borrow money cheaply in order to properly serve ratepayers. That echoed comments he made on an investor conference call organised by Bank of America on Thursday, when he said he could not imagine allowing the state’s largest utility to go into bankruptcy.
Picker was surprised hours later on Thursday to learn that PG&E’s stock had surged over 40 percent in extended trading in reaction to his comments.
“I was stunned and terrified,” Picker said.
PG&E shares on Friday closed up 37.54 percent to $24.40 on the New York Stock Exchange.
With PG&E potentially facing mounting costs from wildfires, the regulator would also consider potential options to restructure the company, including separating its electricity and gas units, Picker told Reuters on Friday.
GRAPHIC - PG&E shares surge after Thursday's close on utility regulator's comments: tmsnrt.rs/2QNMYF1
California state Senator Bill Dodd told Reuters it was “too soon” to speculate about future legislation that might provide relief to PG&E in case it is found liable for the Camp Fire.
Dodd sponsored legislation passed this year that lets utilities pass some of the costs related to liability from wildfires on to ratepayers, but the bill did not specifically provide for 2018.
Picker made his comments about PG&E after the company’s stock had slumped over 60 percent since the fire broke out on Nov. 8. Even after Friday’s rebound, the stock remains down 50 percent from before the Camp Fire started, erasing nearly $13 billion in market capitalisation.
GRAPHIC - Fire Fear: tmsnrt.rs/2PyMu9a
Reporting by Nichola Groom in Los Angeles and Noel Randewich in San Francisco; additional reporting by John Benny in Bengaluru and Dan Burns in New York; Editing by Leslie Adler