PG&E Says it Will File Chapter 11 Bankruptcy

Posted January 17, 2019

As Pacific Gas and Electric (PG&E) faces billions of dollars in claims over the California wildfires of 2017 and 2018, the company has announced that they intend to file for bankruptcy.

Veteran New York bankruptcy lawyer H. Jeffrey Schwartz said PG&E's bankruptcy should prove to be the biggest yet, since it had about $50 billion in liabilities at the end of 2017.

A bankruptcy also would allow PG&E to raise cash by selling assets - such as its gas business and hydropower plants - more easily, he said.

Monday's announcement comes just a day after the company said its CEO is stepping down.

Mark Toney, executive director of consumer advocate group the Utility Reform Network, said the atmosphere had cooled considerably toward PG&E in recent months, making a bailout politically more hard for lawmakers.

A bankruptcy filing could help the company deal with such fundamental problems as the prospect of continually being exposed to financial fallout from future wildfires, the company said. While PG&E's equipment has been named the cause of multiple recent fires, experts blame climate change for extending California's wildfire season and making blazes more deadly and destructive.

The utility said the bankruptcy process would not affect electric or natural gas services for customers.

The plans have not been finalised and the communication could come later, the source said.

Williams, who became CEO in March 2017, was in elite company as one of the only women to run a power company and one of only about two dozen women running an S&P 500 company.

As a regulated utility, PG&E has appealed to the California Public Utilities Commission for higher gas and electric rates to recover costs. The utility has faced intense criticism and regular public protests at its San Francisco headquarters over the role its equipment has played in a series of wildfires that have devastated California over the past two years. Her actions coincided with the news that the company would be filing for bankruptcy on January 29. Here, transmission towers in a valley near Paradise, Calif., as the Camp Fire burns in November 2017. A number of the fires have been attributed to energy traces' coming into contact with bushes, which critics have mentioned is a result of the utility's failure to trim the bushes.

PG&E spent millions in an 11th-hour lobbying effort at the end of the California legislative session in August in a failed attempt to change the law to reduce its financial liability in wildfires. "Years of drought, extreme heat and 129 million dead trees have created a "new normal" for our state", the company said.

PG&E faces a lawsuit brought by more than three dozen plaintiffs alleging the fire was started by faulty steel rings atop a transmission tower, which brought unsafe live wires crashing down.

As for the lawsuits, PG&E will negotiate with the plaintiffs and its other creditors a reorganization plan based on how much the utility is able to pay, said Hugh Wynne of Sovereign Research, an investment research firm. "PG&E is the state's largest investor in energy efficiency and electric vehicle infrastructure, alone, with annual commitments well in excess of $1 billion", he said.

The bankruptcy filing will not make the lawsuits disappear, but it will result in all of the wildfire claims being consolidated into a single proceeding before a bankruptcy judge, not a jury.