PG&E plans bankruptcy after fires
SACRAMENTO — Overwhelmed by billions of dollars in claims from the Camp Fire and the 2017 wildfires of Northern California, PG&E said Monday it plans to file for bankruptcy.
The embattled utility gave 15-day notice of its intent to file for protection under Chapter 11 of the bankruptcy code, as required by a state law enacted last fall to deal with utility fire liabilities. The company made the announcement barely 12 hours after announcing the resignation of its CEO, Geisha Williams.
“We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion,” said interim CEO John R. Simon in a prepared statement. He pledged to “continue providing our customers with safe service and investing in our systems and infrastructure.”
Richard Kelly, chairman of PG&E Corp., said a Chapter 11 filing “represents the only viable option to address to the company’s responsibilities to its stakeholders.”
Gov. Gavin Newsom said he will work with the Legislature “and all stakeholders on a solution that ensures consumers have access to safe, affordable and reliable service, fire victims are treated fairly, and California can continue to make progress toward our climate goals.”
PG&E said it is in the process of lining up $5.5 billion in so-called “debtor-inpossession” financing to operate the company while in Chapter 11. It said both the parent corporation, PG&E Corp., and the utility, Pacific Gas and Electric Co., will file for bankruptcy.
PG&E has already asked state regulators for a $1 billion rate hike, beginning in 2020, to help cover the increased costs of improving its fire safety.
The filing, the second in the company’s history, will allow PG&E to keep operating while it sorts out its debts.
The company has already told investors it doesn’t have enough insurance to handle the expected billions in wildfire liabilities.
The Legislature last year gave PG&E a partial bailout, instructing the Public Utilities Commission to take utilities’ finances into account when deciding whether to let ratepayers absorb any of the costs of wildfire claims. But the law, SB 901, doesn’t take into account fires started in 2018 or beyond, including the Camp Fire. The Nov. 8 fire destroyed Paradise and killed 86 people, more than any other in state history.
The survivors who are suing PG&E will now become unsecured creditors, along with investors holding billions in PG&E debt. Experts say that means it’s unlikely they’ll get 100 percent repayment.
PG&E shares quickly fell $8.20, to $9.39, in early morning New York Stock Exchange trading. Shares were trading at nearly $50 before the company disclosed that a faulty transmission tower may have caused the Camp Fire.