Pacific Gas and Electric Co. shares plummeted 10.5 percent Friday, after state regulators directed the company to preserve any evidence of failed poles, conductors or other equipment that might be connected to Northern California wildfires that killed at least 35 people.
The steep, one-day fall means the value of California's largest utility, or market capitalization, dropped about $3.5 billion, from $33.1 billion to $29.6 billion.
Investors "are spooked," said Philip Adams, a senior analyst with independent bond research firm Gimme Credit.
California fire officials are investigating downed power lines and other utility equipment as possible causes of the fires that have burned in eight counties and destroyed at least 5,700 homes and buildings.
The California Public Utilities Commission also directed the utility to tell employees and contractors to preserve emails and other documents related to potential causes of the fires, as well as maintenance and tree trimming.
In documents filed with federal regulators, parent PG&E Corp. said it is unknown whether the utility could face any liability associated with the fires, and that it has about $800 million in insurance for potential losses from them. It acknowledged PG&E's finances and cash flows could be "materially affected" if the amount of the insurance falls short of any liability, according to the filing with the U.S. Securities and Exchange Commission.
California officials say it will be weeks before they determine the causes of the wildfires sweeping the state. The California Department of Forestry and Fire Protection has said it's unclear if power lines were knocked down by the fires, or if they started the blazes.
The utility's stock fell $6.78 on Friday, to $57.72.
Earlier this year, state utility regulators fined PG&E $8.3 million for failing to maintain a power line that sparked a massive blaze in Northern California that destroyed 549 homes and killed two people. A state fire investigation found the utility and its contractors failed to maintain a gray pine tree that slumped into a power line igniting the September 2015 fire in Amador County.
The blaze burned for three weeks, killing two people and destroying more than 900 structures, including about 550 homes.
Previously, California regulators fined PG&E $1.6 billion for 2010 natural gas explosion in the San Francisco Bay Area city of San Bruno that killed eight people and destroyed 38 homes.