Northern California towns ravaged over the past four years by unprecedented wildfires have reached a $1 billion settlement with bankruptcy-bound Pacific Gas and Electric Co. (PG&E), whose electric utility equipment was identified as the probable cause for the deadly damage.

The settlement is part of PG&E's ongoing Chapter 11 reorganization and does not affect billions that are sought in civil lawsuits filed against the San Francisco-based combination utility by individuals and businesses affected by the wildfires.

As part of the settlement, $270 million is designated for the town of Paradise, which was wiped out in the Camp Fire last November. Another $252 million is designated for Butte County, where Paradise is located. The Camp Fire is considered the most destructive wildfire in state history.

PG&E spokesperson James Noonan called the settlement a "first step toward an orderly, fair, and expeditious resolution of wildfire claims," while demonstrating the utility's willingness to work collaboratively with stakeholders. Noonan reiterated the utility’s mantra that even during bankruptcy proceedings, the primary focus is to support customers and communities impacted by the fires.

"PG&E has reached agreements with local public entities impacted by the 2015 Butte Fire, 2017 Northern California wildfires and the 2018 Camp Fire to resolve their wildfire claims under a Plan of Reorganization (POR) to be filed by PG&E," Noonan said. "Per the agreements, $1 billion in cash will be paid as part of PG&E’s POR, subject to the bankruptcy court confirmation and the effective date of the POR."

The agreement comes as state officials resume discussions and prepare to take action that could break up PG&E, one of the oldest and largest investor-owned energy utilities in the nation.

California regulators on Tuesday issued a ruling seeking stakeholder comments on a set of proposals to improve the safety culture at PG&E.

The California Public Utilities Commission (CPUC) is seeking "safety, financial, and legal" input related to four scenarios for transforming the utility as part of an ongoing initiative to ensure safer, more reliable gas and electric service.

As part of the data gathering, the CPUC has proposed scenarios to separate the gas and electric operations/assets, periodically reconsider PG&E's certification as a public utility; eliminate the corporate holding company structure and link future profits to safety performance metrics.

CPUC President Michael Picker said the commission "must understand whether PG&E is too big to succeed, is adequately incentivized to make the right choices, and its structure is appropriate to provide just and reliable service."

Separately in Sacramento, reports are circulating that Gov. Gavin Newsom and the legislature are considering whether to create a wildfire recovery fund for both victims and the utilities. Also rumored to be in the works is setting aside the state’s strict liability inverse condemnation for utilities.