PG&E shares fall after explosion in California, as investors factor in uncertainty

PG&E shares fall after explosion in California

NEW YORK — Shares of PG&E Corp. fell sharply Friday after an explosion killed at least four people and injured dozens more in a San Francisco suburb where the utility provides natural gas service.

In a filing with the Securities and Exchange Commission Friday, the company said its operations could be “adversely affected,” depending on the outcome of an investigation into the cause of the giant fireball in San Bruno, Calif., on Thursday night.

The company, which is the parent of Pacific Gas and Electric Co., also said in the filing that it maintains $992 million in liability insurance for damages caused by fire.

PG&E shares closed down $4.03, or about 8 percent, at $44.21 during the regular session. The drop slashed $1.57 billion from the company’s market capitalization, based on its 390.75 million shares outstanding at July 29.

The stock gained back 14 cents to $44.35 in after-hours trading.

PG&E said in a statement that, “if it is ultimately determined that we were responsible for the cause of the incident, we will take accountability.”

Pacific Gas and Electric Co. President Chris Johns said crews still haven’t been able to determine the cause of the ruptured steel gas pipe or the ensuing blast because they can’t get close enough.

The fire was contained by Friday, but at least a quarter of the charred area was still too hot for firefighters to search. The National Transportation Safety Board planned to investigate the blast.

Standard & Poor’s on Friday placed its rating on the company on review for possible downgrade.

Such incidents can cause uncertainty for investors because of the potential for years of litigation and increased government oversight.

It’s also not the first fatal explosion on a PG&E gas line in Northern California. In late 2008, an explosion killed a 72-year-old man in a Sacramento suburb, destroyed one home and seriously damaged others.

Investigators said in their final report on that incident that PG&E used a wrong pipe to repair the gas line two years before the explosion. In response, PG&E said it had taken “extraordinary measures” to ensure a blast like that would never happen again.