Nearly one million customers of the Pacific Gas & Electric Company (NYSE: PCG) in Northern California will have their power disconnected staring midnight Wednesday. The power outage will hit PG&E’s pockets hard as it will be losing approximately $200,000 per hour in revenues.
According to Pacific Gas & Electric Company, around 800,000 residential, commercial and industrial customers will have their electricity disconnected. In total, 34 counties in Northern California will be affected. This is in a bid to prevent wildfires as the prevailing dry weather has produced conducive conditions for fires.
Pacific Gas & Electric Company to lose Millions of dollars in revenues every day
In 2018, PG&E generated total operating revenues amounting to $12.713 billion from 5,428,318 customers. The average annual revenue per user was thus $2342. Per hour, each user was generating approximately $0.27 on average.
Assuming the power utility will generate roughly the same revenue from each user in 2019, PG&E will lose about $216,000 every hour the outage is in place. On a full day with all the 800,000 customers affected PG&E will lose approximately $5,184,000.
While the high winds which are forcing the power utility to take precautionary are expected to last until midday Thursday, the outage could last for several days. Per a statement, repairs on possible damage to its equipment will take place only after normal weather has returned:
The power will be turned off to communities in stages, depending on local timing of the severe wind conditions, beginning with counties in the northern part of the state.
Why the precautionary measures?
Following similar weather conditions in previous years which resulted in devastating wildfires, PG&E was widely blamed. Specifically, the utility’s fallen power lines were pinned as the cause of some of the fires. This includes California’s deadliest wildfire in history, the Camp fire in Paradise. The fire killed 86 people and burned 150,000 acres.
Lawsuits led the utility to declare Chapter 11 bankruptcy earlier this year. In its 2018 annual report, the utility indicated that its Camp fire-related costs, net of insurance, amounted to $6.823 billion. Other fires that occurred in 2017 were also blamed on PG&E.
How has PG&E stock reacted to the power outage?
Pacific Gas & Electric Company had been warning of the outage for days but only confirmed on Tuesday. Consequently, the stock plummeted by 5.22%.
Since September 2017, PGE’s stock has fallen by 84.77% from a record high of $71.57 to $10.90.