Shares of electric utility company PG&E plunged 8.3 percent Friday on concerns its power lines may have started the massive wildfires that have ravaged California recently.
The stock was also on track for its worst day since September 2010.
The California Public Utilities Commission sent a letter on Thursday to PG&E — California’s largest electrical utility company — reminding them to preserve “all evidence with respect to the Northern California wildfires in Napa, Sonoma and Solano Counties,” according to multiple reports.
The commission was investigating whether electrical lines that were knocked down by a windstorm on Sunday played a role in sparking the most lethal wildfire event in the state’s history.
PG&E shares are down 13 percent this week.
The drop in the stock “reflects the following assumptions: 1) the fire was caused by PCG’s negligence, 2) insurance coverage for 3rd party liabilities will be very limited, 3) damage costs per acre far larger than those for the 2015 Butte fire and 4) material fines and penalties will be assessed. ,” Christopher Turnure, an analyst at JPMorgan, said in a note Thursday. “We appreciate the severity of the fires and the legal challenges of operating in California, but estimate this loss of value as approaching a worst-case scenario for PCG shares.”
Turnure is maintaining his overweight rating on the stock on the notion these fears are overblown.
The wildfire has killed at least 31 people in Northern California and has left hundreds missing in the heart of wine country. The toll from the more than 20 fires raging across eight counties could climb, with more than 400 people in Sonoma County alone still listed as missing.
PG&E did not respond immediately to CNBC’s request for comment.
—Reuters contributed to this report.