PG&E wildfire aid OKd by judge

Attorneys for victims say $105 million inadequate

Pacific Gas and Electric Co. and its parent company won approval Wednesday to create a $105 million fund for housing assistance and other immediate needs faced by victims of the 2017 and 2018 Northern California wildfires.

U.S. Bankruptcy Judge Dennis Montali allowed PG&E to establish the fund despite criticism from wildfire victims’ attorneys who argued the amount falls far short of what the company should provide. The fund will be overseen by a third-party administrator who has not been named yet, and it’s intended to help victims who are uninsured, need help with living costs or have “other urgent needs,” according to PG&E.

Assistance from the PG&E fund will not re

solve victims’ property loss claims against the company — the potential $30 billion figure that motivated the utility’s bankruptcy filing in January. But it is designed to provide shorter-term help to thousands of people who are struggling to get by, including those who lost homes in the historic Camp Fire, which state investigators found PG&E responsible for last week.

“We are ready, willing and anxious to fund the assistance fund,” said Stephen Karotkin, an attorney for PG&E, at a San Francisco hearing before Montali. “That is our commitment.”

PG&E plans to work immediately with committees involved in the bankruptcy case on appointing the fund’s administrator, according to a statement the company issued after the hearing. The administrator will create eligibility requirements, ranking the neediest fire victims, such as those “who are currently without adequate shelter,” as the top priority, the statement said.

Wildfire victims can also receive financial assistance from the government, most notably through the Federal Emergency Management Agency. A government lawyer told Montali that federal officials would work with the fund administrator to avoid illegally duplicating benefits.

Attorneys for a bankruptcy committee whose members include wildfire victims had said that $105 million is insufficient, arguing in court papers that it should be a fund of at least $250 million that Montali could order replenished.

Attorneys for wildfire victims argued that PG&E is creating the fund to curry favor with victims and state leaders whose support will be crucial to helping the company reorganize, so Montali had an opening to secure a greater amount.

“They are not doing it out of the goodness of their heart,” attorney Robert Julian said of PG&E. Julian, who represents the wildfire victims’ committee, called PG&E a “pariah in Sacramento.”

But Montali was unpersuaded. He told Julian he did not think he had the authority to make PG&E put more money in the fund, which the company is creating voluntarily.

The fund’s administration expenses will be capped at $5 million, and PG&E said it will draw the entire $105 million from its cash reserves. PG&E said it will not seek any rate increases to pay for the fund.

PG&E CEO Bill Johnson said in the company statement that the fund is part of the utility’s commitment to wildfire recovery.

“We feel strongly that helping these communities in their time of need is the right thing to do and appreciate the court’s decision,” he said.

Montali gave PG&E four more months to craft a proposed reorganization plan for how it will exit the bankruptcy process. PG&E had wanted six more months, but Gov. Gavin Newsom and others urged the court to make the company move faster.

Wildfire victims’ attorney Gerald Singleton was among those who objected to PG&E’s six-month extension request. He told Montali that ending the exclusivity period — when the company in bankruptcy protection has the sole right to propose a reorganization plan — could “light a fire under PG&E.” Singleton had argued that PG&E should make more progress on resolving the wildfire claims against it before getting any more time.

But Karotkin, the PG&E lawyer, had warned of a “chaotic situation” if the judge were to allow the deadline to pass before the company had a chance to offer a restructuring plan of its own, opening the door to creditors proposing competing plans that may not be feasible.

Montali said he was “mindful of the different points of view,” but concluded that an extension was warranted — just not as long as the one that PG&E had sought. Instead of pushing the deadline back to Nov. 29, as the company had requested, he set it at Sept. 29, a date that was proposed by one of the other committees in the case.

PG&E said that the extra time will “help increase our chances of formulating and negotiating a plan of reorganization that is feasible and agreeable to stakeholders.” A successful plan may also depend on actions from legislators or regulators this summer, the company said.