A rising number of US companies are flagging wildfire risk as suppression costs climb

California’s biggest utilities aren’t the only U.S. companies grappling with the increased force and frequency of wildfires. While many S&P 500 firms have included “fire” in the risk factor section of their 10-Ks, this analysis specifically accounts for “wildfire.” Perhaps unsurprisingly, real estate companies make up the largest share — 10 of 37 — that have flagged wildfire risk in 10-K filings this year. S&P 500 companies noting “wildfire” as a risk in their annual 10-K filingsA number of thes


California’s biggest utilities aren’t the only U.S. companies grappling with the increased force and frequency of wildfires.
While many S&P 500 firms have included “fire” in the risk factor section of their 10-Ks, this analysis specifically accounts for “wildfire.”
Perhaps unsurprisingly, real estate companies make up the largest share — 10 of 37 — that have flagged wildfire risk in 10-K filings this year.
S&P 500 companies noting “wildfire” as a risk in their annual 10-K filingsA number of thes
A rising number of US companies are flagging wildfire risk as suppression costs climb Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-10  Authors: jr reed, adam jeffery
Keywords: news, cnbc, companies, 10k, number, risk, wildfire, power, wildfires, state, past, increased, costs, pge, companies, climb, rising, suppression, flagging


A rising number of US companies are flagging wildfire risk as suppression costs climb

California’s biggest utilities aren’t the only U.S. companies grappling with the increased force and frequency of wildfires.

The number of S&P 500 firms flagging “wildfire” as a potential risk factor in annual reports has increased dramatically over the past decade — from 9 in all of 2010 to 37 so far in 2019. In just the past year, at least 14 companies in the S&P 500, including Marriott and Monster Beverage, have added wildfires to their basket of concerns in 10-K filings with the Securities and Exchange Commission. While many S&P 500 firms have included “fire” in the risk factor section of their 10-Ks, this analysis specifically accounts for “wildfire.”

California-based utilities PG&E and Edison International have drawn much of the spotlight since 2017 and, more recently, as the two companies prophylactically shut off power to vast portions of their service areas in October. But, in just the past couple of years, businesses across an armada of industries have started to sound the alarm.

Perhaps unsurprisingly, real estate companies make up the largest share — 10 of 37 — that have flagged wildfire risk in 10-K filings this year. But concerns are spread across sectors from banking to biotech to semiconductors.

Those proliferating worries are reflected in the data. Ten of the 20 most destructive U.S. wildfires since 1923 have ignited in the last five years.

S&P 500 companies noting “wildfire” as a risk in their annual 10-K filings

A number of these companies have added wildfires to a burgeoning list of natural disaster threats, which include earthquakes and tornadoes. Orville, Ohio-based consumer giant J.M. Smucker, for instance, had flagged the risk of tornadoes to its production facilities in Kansas and Alabama in 2018. But, this year, the consumer giant added a new line on California wildfire.

Other firms have been more explicit in their warnings.

In its latest 10-K filing, Houston, Texas-based power infrastructure company Quanta Services warned investors that its current insurance coverage might not sufficiently account for wildfire risk.

“Should our insurers determine to exclude coverage for wildfires in the future, due to the increased risk of such events in certain geographies or otherwise, we could be exposed to significant liabilities and a potential disruption of our operations,” Quanta Services executives said. “If our risk exposure increases as a result of adverse changes in our insurance coverage, we could be subject to increased claims and liabilities that could negatively affect our business, financial condition, results of operations and cash flows.

Redwood City, California-based data center firm Equinix, meanwhile, has directly cited PG&E as it works to confront the surging wildfire threat. In January, PG&E filed for bankruptcy protection, saying it’s facing more than $30 billion in liabilities after it was determined that its power lines sparked last year’s devastating Camp Fire. The fire, the deadliest in California’s history, killed 86 people and left 30,000 homeless. The power company was also deemed responsible for 12 of the fires that tore through Northern California in October 2017, according to state officials.

While PG&E has said it will honor $42 billion in existing power agreements as a part of its plan to restructure and ultimately emerge from bankruptcy, escalating wildfire threats introduce further uncertainty for businesses across a swath of industries that rely on the utility. On Thursday, PG&E reported $1.6 billion in losses last quarter as it faces increased pressure from state and local officials.

“If PG&E seeks and is allowed to reject power agreements, it is difficult to predict the consequences of any such action for us,” Equinix executives said in their latest 10-K filing. “But they could potentially include procuring electricity from more expensive sources, reducing the availability and reliability of electricity supplied to our facilities and relying on a larger percentage of electricity generated by fossil fuels, any of which could reduce supplies of electricity available to our operations or increase our costs of electricity.”

But Equinix isn’t alone, and executives at a slew of companies — ranging from Comcast to Ulta Beauty to Corona brewer Constellation Brands — are closely monitoring probes into the spate of wildfires that have ravaged California since mid-October. At one point, 16 were burning across the state. As of Friday, all but one were fully contained, according to the California Department of Forestry and Fire Protection. Local and state officials lifted all mandatory evacuation orders this past week but investigations are ongoing.


Company: cnbc, Activity: cnbc, Date: 2019-11-10  Authors: jr reed, adam jeffery
Keywords: news, cnbc, companies, 10k, number, risk, wildfire, power, wildfires, state, past, increased, costs, pge, companies, climb, rising, suppression, flagging


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