California regulators on Monday proposed a $1.9 billion penalty for the role played by Pacific Gas and Electric Co. (PG&E) in the wildfires that ravaged Northern California in 2017 and 2018, and separately, an administrative law judge (ALJ) proposed a modified reorganization plan for the combination utility.

The California Public Utilities Commission (CPUC) proposals are the next major steps in San Francisco-based PG&E clearing bankruptcy court by June 30 to fulfill the requirements of the wildfire relief law passed last year, Assembly Bill (AB) 1054.

Commissioner Clifford Rechtschaffen overruled an earlier proposal in February that set total penalties in the wildfire settlement to $1.937 billion, including $462 million from the ALJ. Rechtschaffen rejected the ALJ additions, but added $262 million to reflect “strong evidence of pervasive violations and unprecedented harm.”

Since an all-parties settlement was involved, PG&E was allowed to reject parts of the ALJ’s proposed changes, but now it has to deal with a different modification regarding how much it should be penalized for its role in multiple destructive wildfires.

PG&E rejected certain parts of the ALJ’s proposed penalty settlement, including a requirement to return tax benefits to utility customers and a penalty using Wildfire Trust funds.

Rechtschaffen’s proposal maintains the modifications that PG&E did not challenge and added requirements for some return of tax savings related to operations. It also permanently suspended the need for PG&E to pay a $200 million fine to the state general fund.

“We are committed to doing right for the communities impacted, and will respond to this latest proposed decision in 10 days as directed by the CPUC,” said spokesperson Ari Vanrenen. The ALJ’s proposal is “another positive step as we continue to work diligently to emerge from Chapter 11 and get wildfire victims paid fairly and quickly.” The proposal and Gov. Gavin Newsom’s support “keep us on track.”

The proposed decision by ALJ Peter Allen appears to include several proposals outlined earlier by CPUC President Marybel Batjer, addressing PG&E’s management, board governance and regulatory oversight. The CPUC already has set May 21 to vote on the proposed bankruptcy exit plan.

Among the provisions that Allen added to the exit plan is a process under which PG&E could ultimately lose its license in the event of future safety violations, as well as a “re-oriented” management and board, and creating operating regions. There also is a series of restrictions on using utility rates to recover certain bankruptcy or wildfire costs.

Earlier this year, PG&E CEO Bill Johnson acknowledged the daunting task in gaining support from key stakeholders, including Newsom, legislators and the CPUC. In a filing to the CPUC late in January, PG&E told regulators it was on track to exit bankruptcy and become a financially stable, “reimagined utility.”

Last month, Newsom agreed to support a modified exit plan in a joint filing in bankruptcy court. The agreement includes PG&E’s acceptance of a state takeover if it fails to get timely court and state approvals.