Utility Xcel Energy Inc. agreed to pay about $640 million to resolve claims that its power lines contributed to the 2021 ignition of the costliest wildfire in Colorado history.
The company said in a filing Tuesday that it reached settlements with individual property owners, public entities and insurers ahead of a trial with billions of dollars stake that was scheduled to begin this week in a Boulder County court. Xcel said it expects to recognize a $290 million charge to earnings as a result. The company isn’t admitting fault or wrongdoing in connection with the settlements.
Only a handful of utilities have gone to trial to defend lawsuits over wildfire property damage. A dramatic example came in 2023 when Berkshire Hathaway Inc.’s PacifiCorp utility chose to go to trial and was found liable for Oregon’s 2020 Labor Day wildfires, leading to a $30 billion demand from victims.
Prolonged Draughts
The impact of wildfires has become more pronounced in recent years thanks to prolonged droughts spurred on by climate change and changing demographics, particularly across the US West, Australia, southwestern Europe and even in the boreal forests of Canada and beyond the Arctic Circle.
That has created massive challenges for utilities, which are regularly involved in or blamed for fires, and insurance companies, which have been stressed by the increasing costs of rebuilding after fires. California utility PG&E Corp. filed for bankruptcy in 2019 while facing more than $30 billion in liabilities for allegedly starting some of the worst wildfires in state history.
The Marshall fire began near Boulder on Dec. 30, 2021, and burned more than 1,000 homes and dozens of commercial structures. It killed two people and many pets. The blaze was comprised of two fires that merged, with the first starting on a residential property with no connection to Xcel.
Utility analysts said the jury trial over the Marshall fire posed a major risk for Xcel. In a worst case, the company could have faced damages of more than $7 billion including awards to victims for emotional distress, known as non-economic damages, according to Andy DeVries at CreditSights.
‘Rock-Solid’
“What we’ve learned in California and Oregon is it’s the non-economic damages that can really really get you,” DeVries said before the settlement was announced. He added that Xcel has a “rock-solid” balance sheet and could handle a multibillion-dollar hit if it lost at trial.
The trial would have focused on the second ignition, with investigators and Xcel disagreeing over who was responsible. A 2023 report by the Boulder County Sheriff’s Office said “the most probable cause of this ignition was hot particles discharged from Xcel Energy powerlines.”
Xcel argued that it can’t be ruled out that the second ignition was caused by an underground coal fire. “We’re prepared to go to trial in September because we don’t believe that our equipment cause the second ignition,” Chief Executive Officer Bob Frenzel told Bloomberg News earlier this year.
Telecom companies Qwest Corp. and Teleport Communications America, which were also defendants in the lawsuit, joined in the settlement, according to Xcel.
Xcel has acknowledged that its infrastructure sparked the Smokehouse Creek Fire in Texas in 2024 and has settled claims made by that blaze’s victims.
Copyright 2025 Bloomberg.
Topics
Catastrophe
Natural Disasters
Wildfire
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