(CN) – Pacific Gas & Electric said Thursday it expects to pay at least $2.5 billion to cover the cost of lawsuits and other issues stemming from wildfires that killed 44 and destroyed thousands of homes in Northern California last year.
Earlier this month, the California Department of Forestry and Fire Protection determined the cause of 14 fires in California’s wine country were caused by by downed power lines, distribution lines and the failure of conductors and power poles maintained by PG&E.
But the utility said its liability can climb even higher as state officials have not yet found what ignited California’s most destructive wildfire, which destroyed more than 5,000 buildings, including 2,800 homes in the town of Santa Rosa that was hardest hit by the deadly flames.
Prosecutors also are investigating whether PG&E should be charged with any crimes if it is found to have failed to follow state safety regulations.
The utility said in a filing Thursday with the Securities and Exchange Commission that the $2.5 billion charge tied to the wildfires will be recorded in the quarter ending June 30.
PG&E said the figure is at the low end of its estimated liability, which could exceed $10 billon. The utility said it has about $840 million in insurance for the fires.
In its SEC filing, the utility blames the need for the charge on the “state’s flawed policy of inverse condemnation” and says the policy needs to be reform. California is one of the few states that applies the “inverse condemnation” liability to situations caused by equipment.
In a statement, Geisha Williams, PG&E’s CEO and president, said “liability, regardless of negligence, undermines the financial health of the state’s utilities, discourages investment in California and has the potential to materially impact the ability of utilities to access the capital markets to fund utility operations and California’s bold clean energy vision.”
PG&E and Southern California Edison are both facing multiple lawsuits over faulty equipment claims from homeowners and residents who were impacted by wildfires last year.
California State Senator Bill Dodd authored Senate Bill 819, which would stop utility companies from passing on those liability costs to customers if faulty equipment is found at fault. But it would also provide utilities with a shield from lawsuits if they meet certain state requirements to reduce fire risk. The bill is currently in the state Assembly.
While the largest wildfire in California’s history, the Thomas fire, was declared contained earlier this year, the state continues to experience extreme drought conditions . According to the National Integrated Drought Information System 77 ercent of the state’s population — roughly 22 million people — is currently living in drought areas. According to CalFire, 1,860 wild fires have consumed about 14,535 acres this year.
Meanwhile, a huge wildfire currently burning over 41,000 acres in New Mexico has displaced thousands of residents, and another massive wildfire has devastated La Plata County in Colorado. According to the Rocky Mountain Incident Management Team that fire has burned about 34,161 acres.