Wildfires are posing an escalating risk for electric utilities, with natural disasters becoming more frequent and severe due to climate change, forest management practices, and population growth in the wildland urban interface. This ongoing situation places utilities in a precarious position regarding operational stability, regulatory compliance, and operational health.
Wildfires not only present serious operational risks to utilities, but also, most critically threaten the potential deterioration of credit metrics and investor sentiment, which can have long-lasting consequences for access to capital and overall financial viability. This CRA Insights dives into these severe financial risks and reaffirms that utilities must prioritize the development and implementation of comprehensive wildfire mitigation plans (WMP). The author Andrew Dressel describes how seeking an independent evaluation of WMPs insurers, rating agencies, and regulators can better understand the operational risk environment and utilities can better protect infrastructure, reduce the likelihood of wildfires, and safeguard their financial health.
Click here to read about how wildfires threaten utility financial stability.
