PG&E CORPORATION

Red flags

• Recorded wildfire liabilities are $1.325 billion for the 2019 Kincade fire, $2.15 billion for the 2021 Dixie fire, and $350 million for the 2022 Mosquito fire; management says these estimates exclude categories of potential damages and could increase.
• Kincade and Dixie liabilities exceed available liability insurance of $430 million and $521 million, respectively. Dixie recoveries of $632 million and Mosquito recoveries of $61 million remain subject to CPUC/FERC prudency determinations.
• The Utility’s $1.75 billion receivables securitization program was fully outstanding at year-end, leaving no stated availability under that program; total credit-facility availability was $3.836 billion against $3.325 billion of borrowings and $639 million of letters of credit.
• The Wildfire Fund’s continuation protection does not apply when annual eligible losses are below the greater of $1.0 billion and required insurance coverage, and its disallowance cap can be lost if safety certification lapses or conduct is deemed a conscious or willful disregard for safety.
• The accounting relies heavily on regulatory recovery judgments: if recovery is no longer probable, regulatory assets can be written off with a material effect on financial condition, earnings, liquidity, and cash flow.