SAN FRANCISCO—After months of financial and legal maneuvering, the Pacific Gas and Electric Company (PG&E) received approval for its bankruptcy exit plan from the U.S. Bankruptcy Court for the Northern District of California on Saturday, June 20.
PG&E recently confronted opposition regarding some of the ways it had proposed to fund its bankruptcy exit, including from the San Francisco City Attorney’s Office. City Attorney Dennis Herrera objected to the company’s plan to add a new charge to customers’ bills (which would purportedly be paid back eventually) in order to finance the company’s bankruptcy exit.
The company entered bankruptcy in January 2019 after it faced around $30 billion in liability charges due to the involvement of some of its equipment in a series of California wildfires, including the Camp Fire in the town of Paradise, which has been named the most destructive wildfire in the state’s history. On Tuesday, June 16, PG&E accepted 84 counts of involuntary manslaughter due to its role in the Camp Fire, which had 85 casualties. This guilty plea will require PG&E to pay a fine of up to $4 million.
The decision to allow the company to exit bankruptcy with its proposed financial plan was made by Judge Dennis Montali, who has served in the U.S. Bankruptcy Court in San Francisco since 1993.
This approval gives PG&E the green light to proceed into an official phase of bankruptcy exit, which makes the company eligible for a new insurance fund that was established by California’s State Legislature in July 2019. The insurance fund designates money to help California’s utility companies compensate victims. The fund intends to act as a safety net so that utility companies do not have to go into bankruptcy like PG&E in the case of an accident.
This court decision also advances the path to paying wildfire victims. PG&E will pay $13.5 billion—half of which will be in the form of PG&E stock—to around 70,000 homeowners and companies in order to financially make up for the losses incurred.
As the company exits bankruptcy, one of its upcoming challenges will be to improve safety protocols in order to ensure that it does not face more liability, especially as California’s wildfire season begins.
With this in mind, PG&E announced a “Community Wildfire Safety Program” in early June where it laid out several of the steps it will be taking to protect against malfunctioning equipment leading to wildfires.
PG&E Corporation CEO Bill Johnson said in a statement on Saturday, “PG&E is committed to emerging from Chapter 11 as a fundamentally improved and transformed utility that meets the highest safety, governance, and operational standards.”
