With approval of its $58 billion reorganization plan, Pacific Gas and Electric Co. (PG&E) and its parent company said they will exit Chapter 11 bankruptcy as a “re-imagined” enterprise.
Driven to bankruptcy by devastating wildfires in 2017 and 2018, PG&E now is eligible to tap into a $21 billion state wildfire fund authorized under last year’s fire relief legislation. U.S. Judge Dennis Montali in San Francisco’s bankruptcy court approved the plan Saturday following approval by the California Public Utilities Commission (CPUC) and Gov. Gavin Newsom.
The court’s approval is a “critical milestone” that brings PG&E one step closer to “compensating the fire victims fairly and quickly while setting the course for PG&E’s future,” said CEO Bill Johnson.
PG&E expects to emerge from Chapter 11 in July, at which time all wildfire settlements in the exit plan will be implemented, including funding a fire victims trust through which all claims will be determined, administered,and paid, said spokesperson Evelyn Escalera.
Last December, PG&E reached a $13.5 billion settlement with victims who sustained losses from the Camp Fire, the 2015 Butte Fire and the 2017 Northern California wildfires, all of which were linked to or caused by PG&E equipment. Settlements to date total about $25.5 billion, including an $11 billion settlement with insurance companies, and another $1 billion to settle claims by various cities, counties and other public entities.
Escalera said the plan also binds the San Francisco-based combination utility to commitments regarding its corporate governance, operations and financial structure, with an aim of prioritizing safety. One commitment was addressed recently with the naming of 11 new members to the PG&E Corp. board.
Other commitments bind PG&E to hosting a state-appointed observer to provide first-hand insight of the utility’s safety goals progress; appointing an independent safety monitor when the current term of a federal court monitor ends; and establishing senior executive chief risk and safety officers to report to the CEO.
In addition, the utility has filed a proposal with the CPUC seeking a rate-neutral $7.5 billion securitization transaction after it emerges from Chapter 11, and a separate commitment not to seek recovery in customer rates for the amounts paid to victims for the fires in 2015, 2017, and 2018.
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