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Utilities are becoming a risky business thanks to climate change

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By聽illuminem briefings 馃寧

路 2 min read


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馃棡锔 Driving the news: The Maui wildfires have killed over 100 people and resulted in billions in damages
• Concerns arise regarding the role of Hawaiian Electric Industries, as there are suspicions that their power lines could have ignited the fire
• Their stock plummeted almost 70% within a month, and their ratings have been downgraded to junk status

馃敪 The context: Historically, investor-owned utilities were portfolio staples due to their stability
• Yet, events like Pacific Gas & Electric's 2019 bankruptcy and looming lawsuits against Xcel Energy are reshaping these longstanding investor perceptions

馃寧 Why does it matter for the planet: Utility sectors are facing increasing risks due to climate-related events, which can have significant ramifications for investors
• Many pensions and retirement accounts are at stake: The California pension funds, for instance, endured substantial losses in the PG&E bankruptcy

鈴笍 What's next: Other utility companies in wildfire-prone regions are recognizing similar perils
• Both Edison International and Berkshire Hathaway Energy Company have recently reported their efforts to minimize wildfire risks caused by their equipment, emphasizing the potential inadequacy of insurance coverage

馃挰 One quote: "Across sectors, executives would be well served to look at their operations and ask: what climate risk should I be adapting to right now? It may save them in the long run" (Justin Worland, senior correspondent at TIME) 

馃搱 One stat: The utility sector in the U.S. has a total market cap of more than $1.5 trillion, making it a significant component of many pensions and retirement accounts.

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