PG&E banking on big profits after utility leaves bankruptcy

Pacific Gas and Electric says it expects to become more profitable than ever after it emerges from bankruptcy and pays off more than $25 billion in losses sustained in catastrophic wildfires ignited by its outdated equipment.

The nation’s largest utility shared its rosy outlook, along with its sobering results for 2019.

PG&E wound up losing nearly $7.7 billionlast year, widening from its previous record loss of $6.8 billion in 2018. Last year’s lossincluded a $3.6 billion setback during the October-December period that included an $86 million charge for refunds to customers who had their power shut off to minimize the chances of sparking more wildfires last fall.

The dismal numbers marked a low point the San Francisco company’s 114-year history as it cleaned up a financial mess caused by its liability for a series of deadly fires in 2017 and 2018. The crippling burden prompted PG&E to file for bankruptcy protection 13 months ago, marking its second stint in bankruptcy in two decades.

The losses reported primarily stemmed from the cost of covering various settlements reached with PG&E’s wildfire victims as part of the company’s effort to meet a June 30 deadline for getting out of bankruptcy.

Besides accounting for its past, PG&E also provided a glimpse at the road ahead. The outlook comes as PG&E tried to counter intensifying pressure from California Gov. Gavin Newsom to come up with a plan that gives it the financial muscle to make badly needed improvements in its decaying electrical grid to reduce wildfire risks.

Newsom holds unusual leverage over PG&E at this point because the utility needs its bankruptcy plan to be blessed by the state by June 30 to qualify for coverage from a wildfire insurance fund created by California last summer. The Democratic governor so far has rejected PG&E’s blueprint as unacceptable, partly because he believes the company is taking on too much debt to afford the necessary upgrades to its system.

The tensions could eventually play out in bankruptcy court, where Newsom’s lawyers have indicated they may want to grill PG&E about its finances.

PG&E also is still trying to navigate an escalating battle over whether the Federal Emergency Management Agency and state government agencies should be entitled to recover some of their wildfire costs from a $13.5 billion fund set up for more than 70,000 individuals who lost family members, property and businesses in the blazes. (AP)