Fitch keeps PG&E on negative watch

Fitch Ratings said it maintained the issuer default ratings and individual securities ratings on rating watch negative for utility parent company PG&E Corp. and core operating utility Pacific Gas and Electric.

The agency said the action primarily reflects potential financial exposure to destructive California wildfires that raged across the state in 2017 and heightened business risk exposure given the lack of a clear path to recover third-party liabilities under the current regulatory compact.

Fitch said it believes the wildfires could result in exposure to third-party liabilities of $15 billion, seriously challenging PG&E's creditworthiness especially if, as in past wildfires, the utility is deemed liable under inverse condemnation.

Future actions are expected to be driven by California Department of Forestry and Fire Protection investigation results for the remaining five of the 21 Northern California wildfires, including Tubbs, which was the largest of the NorCal fires, the agency said.

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