(Reuters) - The Los Angeles Department of Water and Power's (LADWP) potential liability for the recent Palisades Fire will depend on whether the utility's power lines or assets were involved in sparking the wildfire, credit rating agency Moody's (NYSE:MCO) said in a report on Friday.
The cause of the deadly Palisades Fire, which has burned almost 24,000 acres since erupting on Jan. 7, is still under investigation. LADWP, the largest U.S. municipal utility, has not yet filed an incident report related to the blaze, Moody's said.
Damage to LADWP's distribution lines and other infrastructure will likely not materially affect the utility's finances and credits, the rating agency said. Much of LADWP's power infrastructure in the burn area was underground, protecting it from the flames.
The cost of shifting LADWP's remaining above-ground power lines underground in areas at high risk of repeated wildfires could be factored into the utility's plans, Moody's said.
"We expect the damage to the power system's assets, and the associated repair or rebuilding costs, to be manageable," the rating agency stated.
Moody's said that if LADWP has equipment that is found to have sparked the Palisades blaze, it could have more serious risks for the utility by making it more vulnerable to costly lawsuits.