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Xcel Energy shares fall from potential Texas wildfire liability

Xcel Energy

(Reuters) — Xcel Energy’s shares fell 8% on Thursday after the company disclosed a letter it received from a law firm that said the electric utility could be held liable for damages resulting from the largest wildfire on record in Texas.

The company said in a regulatory filing that the law firm, which it did not name, sent the letter on Feb. 28 on behalf of various property insurers whose clients claimed to be affected by the Smokehouse Creek fire, which is burning largely uncontrolled over a land mass bigger than the state of Rhode Island.

The letter also requested Xcel to preserve a fallen utility pole of its local unit, Southwestern Public Service Company, within the fire’s vicinity.

The Minneapolis, Minnesota-based utility, which provides power and natural gas to parts of Texas and seven other U.S. states, said investigations into the origin of the fire are underway.

“We will cooperate with officials while conducting our own investigations to determine the causes of the fires,” said Xcel spokesperson Colleen Mahoney.

The raging Texas fire comes as Xcel faces another legal action tied to the deadly late 2021 Marshall wildfire, Colorado’s costliest, which was linked to the utility’s wind-damaged power lines.

Xcel’s shares fell as much as 8.9% earlier in the session and hit their lowest in nearly four years, while the S&P utilities sector declined 0.3%.

Several U.S. power utilities have been sued in recent years in connection with large-scale wildfires. California’s PG&E Corp. filed for bankruptcy protection in 2019, and subsequently restructured, citing potential liabilities exceeding $30 billion stemming from wildfires that were blamed on its equipment.

Last year, Hawaiian Electric was subject to several lawsuits from investors and residents of Maui claiming that the utility was responsible for a deadly wildfire that razed the historic town of Lahaina in August. The company had denied its role in the fires back then.

The Smokehouse Creek fire has so far burned more than 1 million acres in the Texas panhandle and beyond, with firefighters containing only 3% of the blaze so far, according to Texas A&M Forest Service.