PG&E Files for Bankruptcy Protection in Face of Large Wildfire Liabilities

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LOS ANGELES — Pacific Gas and Electric, the largest electric utility in California, filed for bankruptcy protection on Tuesday in anticipation of billions of dollars in liability claims for two years of wildfires.

PG&E, which faces damage claims estimated at tens of billions of dollars for wildfires started by its equipment, said this month that bankruptcy was its “only viable option.”

Investors and state officials tried to persuade the company’s board to change its plans over the last several days by offering alternative proposals and ideas. Some of those people seized on a finding last week by state investigators that PG&E did not cause the Tubbs Fire, which tore through Sonoma County in 2017 and was the second-worst fire in California history. They were hoping that the finding had reduced PG&E’s liabilities enough to make the bankruptcy unnecessary.

Public interest groups, lawyers for wildfire victims and some investors have opposed PG&E’s bankruptcy filing. They fear that it could result in higher electricity rates and make it more difficult for residents to receive compensation for their losses.

BlueMountain Capital Management, one of PG&E’s major investors, said in a statement that the bankruptcy filing was “reckless and irresponsible” and called for replacing the company’s board of directors.

“Today’s filing is the latest example of how the board continues to fail the company, wildfire victims, customers, employees, creditors, shareholders and the people of California,” the asset management firm said in the statement. “We urge all stakeholders to support change at PG&E and will be proposing a new slate of highly qualified and impartial directors.”

But by the start of this week, many investors and state officials appeared resigned to the company’s filing. The California Public Utilities Commission held an emergency meeting Monday afternoon to give its approval to PG&E’s plan to borrow $5.5 billion to finance itself over the next two years while it is in bankruptcy.

“Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires,” John R. Simon, interim chief executive of PG&E Corporation, said in a statement announcing the filing. “To be clear, we have heard the calls for change and we are determined to take action throughout this process to build the energy system our customers want and deserve.”

The California Public Utilities Commission, which regulates PG&E and the state’s other investor-owned utilities, is reviewing possible changes to the utility that include selling part of the company or turning it into a government-run operation.

The International Brotherhood of Electrical Workers Local 1245, a union that represents 12,000 PG&E employees, said it opposed any breakup of the company.

“Parceling out the utility into smaller, weaker segments would unquestionably have a negative impact on the safety and stability of both gas and electric service, it would increase costs, and it would decelerate progress toward California’s ambitious clean energy goals,” Tom Dalzell, the union’s business manager, said in a statement.

As part of the filings, PG&E asked the court to allow it to continue paying employee wages and providing health care and other benefits.

PG&E is also seeking to maintain its customer programs, including support for low-income customers and the promotion of clean or more efficient energy practices. The company says it intends to pay suppliers in full.

The utility expects court decisions on those requests in the coming days.

This is the utility’s second bankruptcy in less than 20 years. It sought bankruptcy protection in 2001 after a botched state deregulation of the electricity industry.

This article is from NYT – go to source

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