Judge to OK $58B plan to end PG&E bankruptcy after wildfires
SAN FRANCISCO » A federal judge on Friday took the final step toward approving a $58 billion plan by the nation’s largest utility to end a contentious bankruptcy saga that began after Pacific Gas & Electric’s outdated equipment ignited wildfires in California that killed more than 100 people, wiped out entire towns and led the company to confess to crimes driven by its greed and neglect.
The decision by U.S. Bankruptcy Judge Dennis Montali clears the way for
PG&E to pay $25.5 billion for losses from devastating fires in 2017 and 2018. The judge said he will sign the formal order confirming PG&E’s plan late Friday or Saturday after the company’s lawyers make a few minor revisions worked out during a two-hour hearing.
“This has been a comprehensive and complex challenge for everyone,” Montali said as he thanked everyone involved in the 17-month bankruptcy case.
Dozens of lawsuits were settled during the ordeal, with $13.5 billion earmarked for more than 80,000 people who lost family, homes, businesses and other property in the fires.
“This is a great day,” said Robert Julian, a lawyer for the bankruptcy committee representing the interests of wildfire survivors. “We are going to start getting money into the hands of the victims.” It still will likely take two to three months for the plan to become effective, and PG&E has raised all the money it needs to start funding the victims’ trust and making other promised payments.
PG&E declined to comment, but it plans to issue a statement after Montali signs the final order. The confirmation comes ahead of a June 30 deadline that the company had to meet to qualify for coverage from a $21 billion wildfire insurance fund created by California last year.
The company still faces formidable challenges: Montali’s decision is allowing the company to emerge from its financial morass just as California heads into a summer expected to bring especially high wildfire risks.
The company plans to find a new CEO to replace Bill Johnson, who will step down June 30 after just 14 months on the job. That hiring decision will be made by an overhauled board of directors, including 11 members who were just recently appointed. PG&E also has committed to slicing up its sprawling territory into regional units to be more responsive to the different needs of the 16 million people who rely on it for power.
Financing the plan requires PG&E to nearly double its debt, saddling the company with a burden its critics fear will make it more difficult to raise the estimated $40 billion for improvements that the utility still needs to make to its electrical grid.
It’s still uncertain whether PG&E is ready to meet the challenges ahead, although the company insists it’s on a new path that will result in safer and more reliable service. PG&E is still behind in its efforts to trim trees and other vegetation that serve as tinder for its power lines during dry, windy conditions.