Tug-of-war over Calif. fire vic­tims’ set­tle­ment

Orlando Sentinel - - WALL STREET REPORT - By Daisy Nguyen

SAN FRAN­CISCO — A fi­nan­cial tug-of-war is emerg­ing over the $13.5 bil­lion that the na­tion’s largest util­ity has agreed to pay to vic­tims of re­cent Cal­i­for­nia wild­fires, as gov­ern­ment agen­cies jockey for more than half the money to cover the costs of their re­sponse to the catas­tro­phes.

Pa­cific Gas & Elec­tric de­clared bank­ruptcy nearly a year ago as it faced about $36 bil­lion in claims from peo­ple who lost fam­ily mem­bers, homes and busi­nesses in dev­as­tat­ing wild­fires in 2017 and 2018. The util­ity ac­knowl­edged its power lines ig­nited some of the fires.

Those claims were set­tled as part of the $13.5 bil­lion deal that PG&E reached last month with lawyers rep­re­sent­ing unin­sured and un­der­in­sured vic­tims.

Mean­while, in­sur­ers had been threat­en­ing to try to re­cover roughly $20 bil­lion in pol­i­cy­holder claims that they be­lieve they will end up pay­ing for losses from those fires. PG&E set­tled with the in­sur­ers for $11 bil­lion.

PG&E must keep work­ing on its broader bank­ruptcy exit plan to meet the ap­proval of state reg­u­la­tors and a bank­ruptcy judge by June, as planned.

In the mean­time, the $13.5 bil­lion set­tle­ment leaves open just how much would be used to com­pen­sate vic­tims, their lawyers and fed­eral and state agen­cies for the money they spent on res­cue and re­cov­ery op­er­a­tions.

Cal­i­for­nia state agen­cies said they’re owed about $3.3 bil­lion, and fed­eral agen­cies in­clud­ing FEMA filed claims to­tal­ing $4.3 bil­lion. The claims are not re­lated to the $1 bil­lion PG&E agreed in June to pay to 14 lo­cal gov­ern­ments to cover dam­ages from wild­fires caused by its equip­ment.

U.S. at­tor­neys and the Cal­i­for­nia at­tor­ney gen­eral’s of­fice raised con­cerns in sep­a­rate court fil­ings last month about “po­ten­tial un­equal treat­ment of claims” and asked U.S. Bank­ruptcy Judge Den­nis Mon­tali to clar­ify how the money will be di­vided. They also urged him to en­sure that set­tle­ment amounts are gov­erned by neu­tral and ex­pe­ri­enced trustees.

Lawyers for the fire vic­tims, mean­while, have asked the judge to re­duce the gov­ern­ment agen­cies’ claims and ar­gued in one court fil­ing that the Cal­i­for­nia gov­er­nor’s of­fice of emer­gency ser­vices can’t re­cover the costs of car­ry­ing out pub­lic ser­vices such as re­sponse to fires.

Many vic­tims dis­sat­is­fied with the set­tle­ment say giv­ing money to the gov­ern­ment agen­cies leaves lit­tle left to peo­ple who are still strug­gling to re­build their lives.

“There’s not enough money in there for ev­ery­body and yet there are too many hands in the pot,” said Sasha Poe, who lost her house in 2018 when a fire killed 85 peo­ple and nearly wiped out the city of Par­adise.

Some vic­tims said they’re up­set that the set­tle­ment pro­vides cash and PG&E stock to a trust, stretch­ing out pay­ments over a few years, while in­sur­ers will re­ceive their set­tle­ment in cash.

“They’re tak­ing care of share­hold­ers first and they want us to wait for pay­ments,” said Lisa Wil­liams, who also lost her house in Par­adise.

MICHAEL BURKE/AP

Homes in a Red­ding, Calif., sub­di­vi­sion were de­stroyed in a 2018 wildfire.

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