Newsom hints at state control of PG&E if bankruptcy fizzles

SACRAMENTO — California Gov. Gavin Newsom demanded Friday that Pacific Gas & Electric shareholders and executives, as well as wildfire victims, bondholders and other parties involved in the company’s bankruptcy, convene in Sacramento next week to work out a deal — and threatened to craft a government-led plan to restructure the state’s largest utility if an agreement isn’t reached quickly.

“It is my hope that the stakeholders in PG&E will put parochial interests aside and reach a negotiated resolution so that we can create this new company and forever put the old PG&E behind us,” Newsom said. “If the parties fail to reach an agreement quickly to begin this process of transformation, the state will not hesitate to step in and restructure the utility.”

PG&E filed for bankruptcy in January, citing some $30 billion in liability costs from wildfires linked to its equipment. In a series of twists and turns in the case, U.S. Bankruptcy Judge Dennis Montali agreed last month to consider a competing plan to resolve the liabilities from the utility’s bondholders, raising the possibility that existing PG&E shareholders could be wiped out at the conclusion of the case.

The California Legislature approved a law over the summer that requires PG&E to exit bankruptcy by June 30, 2020, in order to access a multibilliondollar fund established to help the utilities pay wildfire costs. Newsom has instructed his staff to develop “a blueprint for what a 21st-century utility should look like,” in accordance with the law, that serves as a model for the company that will emerge from bankruptcy.

If the parties in the bankruptcy case fail to reach a hasty agreement that addresses California’s safety concerns and its blueprint, an adviser to Newsom said the state is preparing to submit a motion to the court requesting to introduce its own reorganization plan. In a news conference Friday, Newsom declined to offer a timeline for the negotiations to conclude before the state would introduce its own proposal.

“PG&E, as we know it, may or may not be able to figure this out,” Newsom said. “If they cannot, we are not going to sit around and be passive. The final point I want to make is, we are gaming out a backup plan. If Pacific Gas & Electric is unable to secure its own fate and future and work through the process of getting people together and working to address the needs of debt and equity bondholders and lawyers and victims and subrogation claims, then the state will prepare itself as backup for a scenario where we do that job for them.”