Fire vic­tims feel stung by PG&E’s bank­ruptcy

The Tribune (SLO) - - Front Page - BY DALE KASLER AND TONY BIZJAK [email protected]

Doreen Zim­mer­man lost her hill­side home in the Camp Fire last Novem­ber, flee­ing with a dozen pup­pies in the fam­ily car as flam­ing em­bers rained down on Par­adise. Now she feels she’s been made a vic­tim again — by PG&E’s de­ci­sion to file for bank­ruptcy Tues­day.

“The sur­vivors — I call my­self a sur­vivor — we have been shorted,” said Zim­mer­man, who’s liv­ing in a rental home in Yuba City. “PG&E is go­ing to go to vic­tims and say, ‘We are go­ing to pay you 60 cents on the dol­lar, or 50 cents or what­ever.’ They are go­ing to twist this and cry ‘Oh poor me,’ and go back in the board­room and laugh their butts off. They are still go­ing to get bonuses in high man­age­ment.”

Zim­mer­man is among scores of North­ern Cal­i­for­nia wild­fire vic­tims left fum­ing and dis­trust­ful af­ter PG&E filed for bank­ruptcy.

Cit­ing $30 bil­lion in po­ten­tial li­a­bil­i­ties from the 2017 and 2018 wild­fires, util­ity of­fi­cials con­tended the fil­ing is the only way to keep the com­pany go­ing — and in­sisted that their de­ci­sion will ac­tu­ally ben­e­fit fire sur­vivors.

Bank­ruptcy can re­solve wild­fire law­suits “more quickly and more eq­ui­tably than ... the state

court sys­tem,” PG&E Chief Fi­nan­cial Of­fi­cer Ja­son Wells said in court pa­pers. Bank­ruptcy isn’t “a strat­egy or at­tempt to avoid PG&E’s re­spon­si­bil­ity for the heart­break­ing and tragic loss of life, dev­as­tat­ing dam­age and de­struc­tion to homes and busi­nesses.”

Wells added that bank­ruptcy is “in the best in­ter­ests of all the debtors’ stake­hold­ers, in­clud­ing their mil­lions of cus­tomers, em­ploy­ees, wild­fire claimants, other cred­i­tors ... and share­hold­ers.”

PG&E’s asser­tion was met with con­sid­er­able skep­ti­cism. Assem­bly­man James Gal­lagher, R-Yuba City, who rep­re­sents the area hit by the Camp Fire, said “noth­ing should stand in the way of com­pen­sa­tion for fire vic­tims” – but point­edly ad­ding that his anger is aimed at cor­po­rate ex­ec­u­tives in San Fran­cisco, not the front-line work­ers who are out “bat­tling the el­e­ments.”

“Frankly, I ques­tion whether or not they are re­ally in a bank­ruptcy sit­u­a­tion or if they are sim­ply at­tempt­ing to skirt their obli­ga­tions,” Gal­lagher said in a press state­ment. “The bank­ruptcy court should do a full and thor­ough vet­ting of PG&E’s fi­nan­cial sit­u­a­tion be­fore al­low­ing their Chap­ter 11 pe­ti­tion to pro­ceed.”

Pa­cific Gas and Elec­tric Co. and its par­ent PG&E Corp. sought Chap­ter 11 bank­ruptcy pro­tec­tion in an elec­tronic fil­ing shortly af­ter mid­night.

It puts the com­pany’s fate largely in the hands of U.S. Bank­ruptcy Judge Den­nis Mon­tali, who over­saw PG&E’s first bank­ruptcy in 2001. State of­fi­cials will play a role, too, as they try to ac­com­mo­date ratepay­ers and wild­fire sur­vivors while en­sur­ing the com­pany is healthy enough to keep op­er­at­ing.

Gov. Gavin New­som, in a pre­pared state­ment, said the bank­ruptcy “does not change my fo­cus, which re­mains pro­tect­ing the best in­ter­ests of the peo­ple of Cal­i­for­nia.”

PG&E was al­ready reel­ing from the po­ten­tial fall­out from the 2017 fires. The Camp Fire pushed the com­pany over the edge. The state’s in­ves­ti­ga­tion isn’t com­plete, but PG&E has dis­closed it ex­pe­ri­enced prob­lems on a high­volt­age transmission tower near the ap­par­ent ig­ni­tion point min­utes be­fore the Camp Fire be­gan.

Ex­perts say PG&E’s bank­ruptcy will bring pain for prac­ti­cally ev­ery­one in­volved. Wild­fire sur­vivors who are su­ing PG&E will be­come un­se­cured cred­i­tors with no higher pri­or­ity on PG&E’s as­sets than the com­pany’s bond­hold­ers — who are owed $18 bil­lion.

A wild­fire vic­tims’ at­tor­ney said PG&E is us­ing bank­ruptcy as a dodge.

“Why do this other than to keep money away from vic­tims?” said Mike Danko, a Bay Area at­tor­ney rep­re­sent­ing sur­vivors of sev­eral fires. “Typ­i­cally you don’t let the per­pe­tra­tor de­cide what is best for vic­tims. The per­pe­tra­tor is a con­victed felon that con­tin­ues to vi­o­late the terms of its pro­ba­tion. What they say is best for vic­tims is in­ap­pro­pri­ate and sus­pi­cious.” PG&E was con­victed of mul­ti­ple felonies af­ter the 2010 San Bruno pipe­line ex­plo­sion.

Sheila Craft, whose home was de­stroyed in the Camp Fire, was strug- gling to make sense of the im­pli­ca­tions of the bank­ruptcy fil­ing.

“From a vic­tim’s stand­point, I don’t see how it nec­es­sar­ily helps me or doesn’t help me,” said Craft, whose fam­ily is liv­ing tem­po­rar­ily in Oroville but is buy­ing a house in Ma­galia, just north of Par­adise.

Ei­ther way, she doesn’t ex­pect pay­ment to come any­time soon.

“I don’t fore­see any­body com­ing in and hand­ing me a check,” she said. She also said she isn’t look­ing for­ward to what she be­lieves is an in­evitable rate hike. “Any time PG&E ends up do­ing any­thing as a whole, rates go up,” she said.

Rates will likely go up, just as they did when PG&E emerged from bank­ruptcy the first time. Last year leg­is­la­tors en­acted a par­tial bailout for the com­pany, say­ing it could pass on at least some wild­fire liability costs to ratepay­ers if the util­ity’s fi­nances couldn’t ab­sorb the to­tal hit.

But the leg­is­la­tion, Se­nate Bill 901, didn’t cover any 2018 fires, in­clud­ing the Camp Fire, which de­stroyed 13,000 homes in Par­adise in Novem­ber and killed 86 peo­ple, the most in Cal­i­for­nia his­tory. Leg­is­la­tors have in­di­cated they’re in no mood to ex­tend SB 901’s pro­tec­tions to help PG&E with the Camp Fire.

PG&E could be forced to spin off as­sets to raise cash. Some crit­ics have been call­ing for a breakup of the util­ity or some sort of gov­ern­ment takeover, while PG&E ex­ec­u­tives said they’re com­mit­ted to over­haul­ing how they do busi­ness.

”To be clear, we have heard the calls for change and we are de­ter­mined to take ac­tion through­out this process to build the en­ergy sys­tem our cus- tomers want and de­serve,” John Si­mon, the com­pany’s in­terim chief ex­ec­u­tive of­fi­cer, said in a press re­lease.

The util­ity did win a par­tial re­prieve last week when Cal Fire said PG&E’s power lines weren’t to blame for the Tubbs Fire, the costli­est and dead­li­est of the 2017 fires. It wasn’t enough to stave off bank­ruptcy.

“Those claims are still there, they still rep­re­sent sig­nif­i­cant claims,” said Steve Mal­night, the util­ity’s se­nior vice pres­i­dent for en­ergy sup­ply and pol­icy.

PG&E warned about the bank­ruptcy fil­ing 15 days ago, as re­quired by state law, and util­ity lawyers said the heads-up ac­cel­er­ated the de­te­ri­o­ra­tion of its fi­nances. The com­pany’s cash sup­ply fell by $811 mil­lion as it was forced to pre-pay for power and other needs. The com­pany has lined up $5.5 bil­lion in new fi­nanc­ing that the com­pany says is nec­es­sary to keep op­er­a­tions go­ing.

“We’re not go­ing out of busi­ness,” Mal­night said.

The fed­eral judge over­see­ing PG&E’s pro­ba­tion, stem­ming from its crim­i­nal con­vic­tion in the 2010 San Bruno pipe­line dis­as­ter, has a hear­ing set for Wed­nes­day on his pro­posal to im­pose strin­gent wild­fire-safety rules on the util­ity this year. That would in­clude manda­tory re-in­spec­tions of all 100,000 miles of PG&E power lines and ex­ten­sive tree-cut­ting op­er­a­tions be­fore the fire sea­son be­gins in June.

PG&E has pushed back on the plan as un­re­al­is­tic and said it would cost at least $ 75 bil­lion. The Pub­lic Util­i­ties Com­mis­sion has also ob­jected, say­ing the judge has gone too far and should leave wild­fire safety to state of­fi­cials.

RENEE C. BYER [email protected]

At a memo­rial for the vic­tims of the Camp Fire, crosses are marked with the names of the vic­tims who per­ished in the dead­li­est wild­fire in Cal­i­for­nia his­tory. The memo­rial at the in­ter­sec­tion of Sky­way Road and Sky­way Cross­ing Road in Par­adise was pho­tographed Dec. 20.

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