PG&E Corp. said the Securities and Exchange Commission has opened an investigation into the company’s disclosures and accounting for losses related to California wildfires.
The investigation, tied to fires in 2015, 2017 and 2018, represents a new problem for the troubled utility, which filed for bankruptcy protection earlier this year, citing wildfire-related liability costs. It is also under federal probation for safety-related problems.
PG&E said in a regulatory filing Thursday that it had learned of the probe by the SEC’s San Francisco office in March. A company spokesperson declined to provide any comment on the SEC investigation.
Also on Thursday, the California utility reported that safety and legal expenses weighed on its first-quarter earnings, as it grapples with how to address the risk of more deadly wildfires.
The company posted a profit of $136 million, compared with $442 million in last year’s first quarter. It said it incurred $410 million in costs in the latest period, primarily associated with wildfire-related lawsuits, bankruptcy matters and efforts to repair and improve the electric grid in Northern California.
PG&E didn’t offer earnings guidance for the remainder of 2019, citing uncertainty associated with lawsuits, its restructuring effort and potential legislative steps to support California’s investor-owned utilities. PG&E said it expects to incur as much as $1.4 billion in legal, safety and bankruptcy costs this year.
The utility sought chapter 11 bankruptcy protection in January, citing more than $30 billion in potential liability costs tied to a series of deadly wildfires in recent years.
A federal judge overseeing penalties stemming from the deadly explosion of a PG&E gas pipeline in 2010 is also considering whether to extend its probation.
The company has been working for months to safeguard its electric grid before the start of wildfire season in June. It is now speeding up efforts to inspect its equipment and trim trees away from lines in areas where wildfire risk is highest.
“As we position PG&E for the long term, we are continuing to implement programs that will make the communities we serve safer in the face of extreme weather and wildfire risk,” said Chief Executive Bill Johnson, who has taken over from interim chief executive John Simon this month.
PG&E recently appointed a new slate of directors, including former Federal Energy Regulatory Commissioner Nora Mead Brownell, who is now chairman of the board.
It also appointed several former utilities executives, restructuring experts and financiers.
Chris Hart, former chairman of the National Transportation Safety Board, will serve as a special adviser to Mr. Johnson, the new CEO.