PG&E shares spiked on Thursday after California regulators said that the troubled electric utility was not responsible for a deadly 2017 fire in the state’s wine country region.
The California Department of Forestry and Fire Protection, also known as Cal Fire, said shortly before the stock market closed that a fire on “a private electrical system adjacent to a residential structure” caused the deadly Tubbs Fire in October 2017.
The Tubbs Fire burned nearly 37,000 acres, killing 22 people and leading to the destruction of more than 5,600 structures in Sonoma County.
“Investigators did not identify any violations of state law,” Cal Fire said in a statement.
Shares of PG&E (PCG) soared nearly 75% on the news but fell in after hours trading.
The Tubbs Fire was one of many separate fires that erupted in October 2017 in Northern California. PG&E on Thursday was only cleared in the Tubbs blaze and not the others.
PG&E may also still be on the hook for damages tied to the Camp Fire in 2018, the most destructive wildfire in California history. PG&E has said that it expects to file for bankruptcy due to the potential for tens of billions of dollars worth of legal claims.
Earlier Thursday, activist investor BlueMountain Capital, which owns about 1% of PG&E’s shares, said it wants the company to dump its entire board. BlueMountain Capital plans to nominate its own slate of directors. Shares of PG&E were lower for most of Thursday due to the news.
BlueMountain Capital has already asked PG&E twice to delay the bankruptcy filing until after the annual shareholder meeting in May, arguing that a Chapter 11 reorganization would hurt wildfire victims, the company’s employees, customers, suppliers and creditors.
A spokesman for BlueMountain Capital added in a statement late Thursday that “the news from Cal Fire that PG&E did not cause the devastating 2017 Tubbs fire is yet another example of why the company shouldn’t be rushing to file for bankruptcy.”
But PG&E argues that a Chapter 11 reorganization may still be necessary.
“Regardless of today’s announcement, PG&E still faces extensive litigation, significant potential liabilities and a deteriorating financial situation,” the utility said in a statement.
PG&E added that resolving all the challenges it faces from the wildfires of the past two years “will be enormously complex.” It noted that thousands of victims have already made claims and that PG&E expects thousand of others to do so as well.