The warning came after an Oregon jury on Feb. 25 awarded $305 million to 16 plaintiffs, or about $19 million each, who accused PacifiCorp of failing to shut down power lines during a Labor Day weekend windstorm. Plaintiffs in previous lawsuits were awarded an average of about $5 million. S&P said it may cut PacifiCorp’s “BBB-minus” credit rating, the lowest investment grade, by at least two notches if future awards are about $19 million per plaintiff, and if the awards are “significant” but small. It said it would closely monitor the decision in the coming weeks.
Trials in the so-called James class action are scheduled to begin in 2028, and PacifiCorp’s immediate parent Berkshire Hathaway Energy said it faces $48 billion in potential payouts, up from $1 billion already paid. PacifiCorp faces a total of $50 billion in losses from wildfires.
In response to S&P’s action, PacifiCorp said it plans to appeal the $305 million decision, and is focused on “providing certainty” to employees, customers and communities. PacifiCorp is awaiting a decision from the Oregon Court of Appeals on whether the class action is properly certified and whether the claimants can recover damages for emotional distress.
Berkshire Hathaway Energy said the loss of investment grade could mean PacifiCorp could not raise money to support ongoing operations, including paying suppliers and providing electricity to customers.
“Pacificorp believes it will have sufficient liquidity to cover its operations and obligations beyond one year.” Parents added.
Berkshire Hathaway has a high investment grade credit rating. In his first annual letter to shareholders, Berkshire CEO Greg Abel said Saturday that the Omaha, Nebraska-based group accepts responsibility when it causes wildfires, but will fight unfair claims in court. “Pacificorp is not an insurer of last resort and should not be treated as a deep-pocketed one,” he wrote. (Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)
