PG&E bankruptcy plan options — awful or dreadful?
Awful or dreadful. Those are the only two options available to the judge charged with overseeing how PG&E will emerge from bankruptcy. Both proposals to restore California’s largest utility to solvency would leave it in the hands of Wall Street hedge funds that aren’t likely to alter the company’s penchant for putting profits before safety.
As for consumers, who already pay some of the highest rates in the nation, prepare for another assault on your pocketbooks.
It’s essential that the California Public Utilities Commission, under the direction of newly appointed President Marybel Batjer, emerge from more than a decade of lax oversight and crack the whip on PG&E. Any rate hike, for example, should only be considered with verifiable guarantees that the utility is meeting basic safety standards.
PG&E, a convicted felon, simply can’t be trusted. Cal Fire’s confirmation earlier this year that the utility caused the 2018 Camp Fire, the deadliest blaze in California history, should have been the last straw. PG&E has been directly responsible for disasters in the last decade that have caused 111 deaths and destroyed more than 20,000 structures.
Unfortunately, neither of the plans before the bankruptcy court would do anything to refocus the company on safety.
The dreadful plan PG&E put before U.S. Bankruptcy Judge Dennis Montali reflects the utility’s disregard for anything not having to do with profits. Making wildfire victims whole should be a high priority, but the utility’s plan is inadequate.
PG&E’S proposal would place an $18.9 billion cap on wildfire payments. The utility has already agreed on an $11 billion settlement with insurance companies to pay for claims, leaving just under $8 billion for wildfire victims who were underinsured or uninsured. That would be a travesty for victims given that, when PG&E filed for bankruptcy protection in January 2019, the utility estimated $30 billion in liability stemming from its role in the catastrophic wildfires.
PG&E’S plan also relies heavily on issuing bonds to pay claims, which would restrict the utility’s ability to borrow money it needs to address its infrastructure shortcomings. But it protects PG&E shareholders, including hedge funds that have bought stock in the utility since the wildfires.
The alternative proposal, initiated by separate hedge funds that are PG&E bondholders, is better, but still rates as awful. It, too, makes insurance companies whole and has the backing of wildfire victims because it would provide $14.5 billion for underinsured or uninsured victims, largely at the expense of shareholders. But it would give the hedge funds a voting majority on the company’s nine-member board and control over the utility’s budget. Gulp. It’s hard to see that turning out well for Californians.
A final downside of the bankruptcy proceedings: They impose an Oct. 21 deadline on the estimated 60,000 wildfire victims to file claims with the court or forfeit their rights to compensation from PG&E. Attorneys for the wildfire victims believe that at the current rate, only about half of the victims will meet the deadline. All victims should take the 10-15 minutes required to fill out the forms (at pgefirevictimshelp.com) making them eligible for compensation.
PG&E should pay a heavy price for its failures, but don’t expect the emerging bankruptcy plan to put the utility on track toward being a more responsible provider of electricity and gas to Northern and Central Californians.