Bankruptcy bound Pacific Gas and Electric Co. (PG&E) said it will support a $21 billion California wildfire fund created by legislation signed into law by Gov. Gavin Newsom earlier this month.
PG&E notified the California Public Utilities Commission (CPUC) of its decision Thursday, saying its contributions would be subject to conditions established in Assembly Bill (AB) 1054 and approval by the bankruptcy court. The contributions themselves would require financing to be resolved through the Chapter 11 process, PG&E said.
The wildfire fund has been awaiting decisions from three major investor-owned power utilities to provide half of the money needed to offer relief to victims of future fires. State officials said it would be months before the fund is operable and years to determine if the law establishing it is effective.
Ratepayers for PG&E, Southern California Edison Co. (SCE) and San Diego Gas and Electric Co. (SDG&E) will pay the first $10.5 billion into the statewide fund through a 15-year extension of a Department of Water Resources surcharge dating back to the state’s recovery from the 2000-2001 western energy market meltdown.
AB 1054 specifies that PG&E pay 64.2% of the $10.5 billion total, SCE pay 31.5% and SDG&E pay 4.3%.
Utility officials said PG&E’s initial contribution will be $4.8 billion, with annual follow-up payments of $193 million. The initial contribution would be payable at the time PG&E emerges from Chapter 11 bankruptcy.
In the ongoing bankruptcy proceeding, a group representing $20 billion of unsecured debts on Tuesday asked a federal court in San Francisco to terminate the combination utility’s exclusive right to file a restructuring plan.
If the court motion were to be granted, the debtholders contend it would provide a “viable path toward confirmation and emergence” from the bankruptcy process.
The motion cited eight key proposals, including helping wildfire victims while debtholders settle for amounts “significantly less than full recovery.” It also sets standards for the utility’s financial health, operating/capital needs and expansion of safety programs while holding the line on retail utility rates.
“At present, and unless and until exclusivity is terminated, only PG&E has the exclusive right to file and pursue a reorganization plan,” the group stated in its motion to the court.
From PG&E’s perspective, spokesperson James Noonan said the utility has made “significant progress” in developing a “viable, fair and comprehensive reorganization plan” that would satisfy all the claim holders and stakeholders alike. “It could put PG&E on a path to be the energy company our customers need and deserve.”
Noonan dismissed the proposal as a potential source of delay in the proceedings, saying the company has resolved “major complex issues” in the case, such as reaching a court-approved $1 billion settlement with 18 Northern California cities and counties affected by last year’s wildfires.
“Terminating PG&E’s exclusive period less than six months after the start of proceedings would increase the potential for a long, drawn-out bankruptcy process,” creating delays and problems for customers, employees and stakeholders,” he said.
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