Governor keeps pressure on PG&E

Determined to meet an upcoming deadline that will allow it to participate in a $20 billion state fund intended to shield utilities from future damage claims, Pacific Gas and Electric Co. said Wednesday that it had reached yet another deal with its creditors to restructure the company. Once again, Gov. Gavin Newsom has decided the deal isn’t good enough.

“It seems clear that rather than amend the debtors’ plan to incorporate the necessary changes, the debtors instead intend to try to leverage the Chapter 11 process to force the California Public Utilities Commission to approve — and the state of California to accept — a suboptimal plan,” wrote Gov. Newsom in his Wednesday court filing in objection to PG&E’s latest financing plan.

“Allowing the debtors to enter into the exit financing commitments will only further embolden the debtors’ strategy.”

Newsom deserves credit for sticking to his demand that PG&E undergo a major material transformation before it’s allowed to exit the bankruptcy process.

PG&E’s involvement in the devastating wildfires of 2017 and 2018 point to a utility in desperate need of an overhaul of its safety investments, its leadership structure and its corporate culture.

So far, the utility hasn’t undergone these kinds of dramatic changes. That’s why so many politicians are eager to force change on PG&E. Whether it’s the more than 100 elected California leaders signing on to San Jose Mayor Sam Liccardo’s proposal to turn PG&E into a customerowned nonprofit cooperative, or San Francisco Mayor London Breed offering $2.5 billion to buy PG&E’s local power lines, there’s an unusually strong political consensus that PG&E can’t be allowed to continue business as usual.

In a statement, PG&E said it was committed to working with the governor to resolve outstanding differences.

“We know the governor has concerns about the plan,” the company said. “Our updated plan will be forthcoming next week as part of the regulatory milestones set forth by the CPUC.”

But in its latest deal, PG&E managed to resolve some of its most persistent differences with a group of bondholders led by Elliott Management, a hedge fund. While wildfire victims remain skeptical of the deal — they held a protest in Sacramento on Friday in opposition to shareholder profits and other portions of the company’s bankruptcy plan — they also won’t get paid until the company resolves its bankruptcy.

Newsom will have to balance the victims’ immediate needs with the state’s longterm need for more serious changes in fire safety and electricity provision. It won’t be an easy balance.

There was a small example of the dilemmas involved earlier this week, when PG&E filed a regulatory request to recover nearly $136 million in rates from customers for a new project to install additional generation substations as part of the utility’s plan to reduce the number of customers who lose power in the company’s planned fireprevention power shutoffs. Reducing the number of people affected by the blackouts, which led to widespread chaos last fall, is unequivocally a positive thing.

But PG&E customers will rightly balk at paying higher rates for overdue improvements, and clean energy groups are rightfully concerned that the rapid pace of the utility’s plan will lead it to rely solely on gaspowered generators.

PG&E said it “recognizes that diesel fuel is not preferred due to the environmental impacts associated with its production and use,” while acknowledging that it used dieselfueled generation during the 2019 shutoffs because it was the only option available.

What’s the responsible course? That’s a question elected officials will have to answer for the substation project and myriad other issues as the utility’s agonizing bankruptcy drags on.