Bill seeks path to turn PG&E into nonprofit

California lawmakers may still create a path to overhaul PG&E Corp.’s structure even though the company is poised to remain an investorowned business after its expected emergence from bankruptcy this year.

State Sen. Jerry Hill, DSan Mateo, is carrying legislation that could make the utility subsidiary Pacific Gas and Electric Co. owned by a new nonprofit public benefit corporation called Golden State Energy. But it would only happen if the PG&E’s bankruptcy implodes or state regulators take the drastic step of revoking the company’s operating license.

While the bar for such a revocation is high, it is an option that the California Public Utilities Commission enshrined in a new enforce

ment process when it approved PG&E’s bankruptcy reorganization plan Thursday. Regulators at the commission could reconsider the license if the company causes more disasters and other enforcement measures prove insufficient.

The legislation, SB350, is important to Hill, who has been a frequent critic of PG&E ever since one of the company’s San Bruno gas pipelines exploded in his district in 2010, killing eight people and destroying 38 homes. “I hope PG&E never starts another wildfire, never causes another pipeline explosion, and I hope the company improves its safety record and public image,” Hill said. “But the state cannot rely on hope alone any longer.”

The bill has not yet advanced in the Legislature. It was supposed to be heard in an Assembly committee on Thursday, but Hill pulled the bill from consideration to continue negotiating potential amendments. SB350 comes as PG&E nears the anticipated conclusion of its bankruptcy, which began in January 2019 because of devastating wildfires the company caused in the years before. PG&E has faced the prospect of structural change in several ways since then, including a threatened state takeover by Gov. Gavin Newsom.

PG&E ultimately struck a deal with Newsom through which he dropped his opposition to the company’s bankruptcy plan — and with it, his threat of a nearterm state takeover. As part of that deal, however, PG&E agreed to put itself up for sale if it fails to meet certain bankruptcy deadlines or regulators rescind its license. The deal allows the state, or someone the state supports, to be the buyer.

Hill called SB350 a “fleshing out” of that part of the deal and said he had discussions with the governor’s office about the bill. A spokesman for Newsom did not respond to a request for comment. PG&E weighed in on the bill in a letter sent Tuesday to the chairman of the Assembly’s utilities and energy committee, which was supposed to hear the legislation on Thursday. Chris Patterson, the company’s senior director of state government relations, wrote that the company was working to emerge from bankruptcy “as a transformed utility” with improvements to its safety structure, operations and corporate leadership.

“In light of the steps that PG&E has taken over the last 18 months, and will continue to take moving forward, we are

confident that none of the provisions in this bill will ever need to be used,” Patterson said in the letter.

Some wildfire victims are worried about the legislation because they fear it could reduce the amount of money available to pay them through the PG&E bankruptcy case. The company plans to fund victims’ claims through an estimated $13.5 billion trust — half of which would be provided in PG&E stock.

Lisa Williams, who lost her home in the 2018 Camp Fire that PG&E caused, said she does not see firm enough assurances in the bill that if the transfer to Golden State Energy is triggered, their trust would retain its full value. Other victims share those concerns, she said.

“We need to see these safeguards written into the bill,” Williams said.

Hill said SB350 is intended to make sure that fire victims are fully paid. If the bill does not pass, victims would be far more vulnerable should PG&E fail to meet its deadlines and is sold to someone else, he

said.

“Without this legislation, they have no guarantee,” Hill said of fire victims. “That is exactly what the legislation is designed to do, is protect them.”

The bill has won some support from a group of more than 200 local government leaders spearheaded by San Jose Mayor Sam Liccardo that has pushed to turn PG&E into a customerowned cooperative. Liccardo and other leaders of the group sent a letter to Hill on Wednesday indicating it could support the legislation if it is amended, citing some concerns around what could happen with the bankruptcy process, rate impacts and grid safety.

“We appreciate your willingness to embrace a direction for the company for which we have long advocated — to alter the company’s ownership structure to ensure that shareholder interest no longer takes priority over the public interest,” the letter said.