Numbers point PG&E to Chapter 11
Utility facing enormous liabilities from wildfire damages
SAN FRANCISCO — The nation’s largest utility said Monday that it is filing for Chapter 11 bankruptcy because it faces at least $30 billion in potential damages from lawsuits over the catastrophic wildfires in California in 2017 and 2018 that killed scores of people and destroyed thousands of homes.
The move by Pacific Gas & Electric Corp., expected by the end of the month, would be the biggest bankruptcy by a utility in U.S. history, legal experts said.
It would allow PG&E to hold off creditors and continue providing electricity and natural gas without interruption to its 16 million customers in Northern and central California while it tries to put its finances in order.
The filing would not make the lawsuits disappear but would result in all wildfire claims being consolidated into a single proceeding before a bankruptcy judge, not a jury. That could shield the company from excessive jury verdicts and also buy time by putting a hold on the claims.
Chapter 11 reorganization represents “the only viable option to address the company’s responsibilities to its stakeholders,” Richard Kelly, chairman of PG&E’S board of directors, said in a statement.
“The Chapter 11 process allows us to work with these many constituents in one court-supervised forum to
comprehensively address our potential liabilities and to implement appropriate changes.”
State officials are investigating whether the utility’s equipment sparked the deadliest, most destructive wildfire in California history, a blaze in Northern California in November that killed at least 86 people and burned down 15,000 homes.
In addition, state investigators have blamed PG&E power lines for some fires in October 2017. Authorities are also looking into the cause of
a blaze that destroyed thousands of homes and killed 22 people in Santa Rosa last year.
California law requires utilities to pay damages for wildfires if their equipment caused the blazes even if the utilities weren’t negligent through, say, inadequate maintenance.
PG&E, which is the nation’s largest utility by revenue and is based in
San Francisco, said it is giving the required 15 days’ notice that it plans to file for bankruptcy protection.
It said it will continue working with regulators and stakeholders to consider how it can safely provide energy “in an environment that con-
tinues to be challenged by climate change.”
The announcement follows the resignation of chief executive Geisha Williams a day earlier.
In a Monday filing with the Securities and Exchange Commission, the company said the liabilities it faces from 2017 and 2018 wildfires could exceed $30 billion, not including punitive damages, fines and penalties.
The largest bankruptcy filing on record by a utility was Energy Future Holdings Corp. in 2014, which had $49.7 billion in liabilities in today’s dollars, according to an analysis by Kevin Kelly, director of publications at S&P Global.