Dive Brief:
- Xcel Energy has been named in 15 lawsuits in connection with the Smokehouse Creek Fire in the Texas Panhandle, which burned more than 1 million acres in March. Company leaders acknowledged that power lines owned by Xcel Energy appear to have played a role in igniting the fire during a first quarter earnings call on April 25.
- So far, Xcel Energy estimates its liabilities from the fire will run $215 million, but Chairman, President and CEO Bob Frenzel warned investors that this preliminary figure could increase as more information about the extent of the fire’s damage becomes available.
- Xcel Energy plans to accelerate or launch multiple new wildfire mitigation policies, and has for the first time established a policy to proactively de-energize the grid during severe weather that could fuel wildfires, Frenzel said. Company leadership is also exploring potential state and federal-level policy solutions to limit utilities' liability for wildfires.
Dive Insight:
Xcel Energy's $500 million insurance policy should offset the cost of its liability for the Smokehouse Creek Fire — believed to be the largest wildfire in Texas state history. But the company already pays a $400 million premium for this wildfire coverage, and Xcel company leaders say they believe it is time for a legislative solution.
“There are precedents at the federal level — you see stuff like the FDIC or FEMA or flood insurance or other types of programs,” said Brian Van Abel, Xcel Energy executive vice president and chief financial officer. “So I think about where the federal government could help — and this applies to the state level too — is having an approved wildfire mitigation plan that can be reviewed by an agency, and then if you are in compliance ... then you have access to some form of backstop insurance program.”
The company's wildfire insurance won't renew until the end of this year, Frenzel said. But he said commercial insurers were already looking to end or curtail wildfire insurance coverage prior to the Smokehouse Creek Fire.
Xcel Energy has also accelerated its own wildfire mitigation programs in the wake of the fire, Frenzel said. The company has established a policy for proactively de-energizing transmission lines during inclement weather and enacted it for the first time earlier this month after high winds damaged power lines in Colorado, Frenzel said. The company has already installed 21 cameras to help detect potential wildfire conditions, but Frenzel said the utility sees potential in building an even more sophisticated early-warning system using weather stations and AI camera monitoring.
The company is also increasing its pole inspection and replacement efforts as well as looking at additional undergrounding, line hardening and vegetation management options, Frenzel said. He said the company disputes any claims that negligence on the part of Xcel Energy contributed to the Smokehouse Creek Fire.
Xcel Energy has also set up a claims process for those who lost property or livestock in the fire, Frenzel said. So far the company has received 46 claims. Xcel Energy also faces lawsuits from the 2021 Marshall Fire in Colorado.
