PG&E Bankruptcy: Company To File Chapter 11 Amid Liability For California Wildfires
- Author: Eleanor Harrison Jan 17, 2019,
Jan 17, 2019, 1:58
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. "Whereas we're making progress as an organization in security and different areas, the board acknowledges the great challenges PG&E continues to face", mentioned Richard C. Kelly, PG&E's chairman.
As a result, PG&E as engaged in discussions with potential lenders when it comes to Debtor-in-Possession ("DIP") financing.
PG&E's shares plummeted more than 48 percent during morning trading Monday.
Assure the company has access to the capital and resources necessary to support ongoing operations and enable PG&E to continue investing in its systems, infrastructure and critical safety efforts, including investing in its Community Wildfire Safety Program, an additional precautionary safety measure implemented following the 2017 Northern California wildfires to further reduce wildfire risk.
"The filing would not make the lawsuits disappear, but would result in all wildfire claims being consolidated into a single proceeding before a bankruptcy judge, not a jury".
"The company today provided the 15-day advance notice required by recently enacted California law that it and its wholly owned subsidiary Pacific Gas and Electric Company now intend to file petitions to reorganize under Chapter 11 of the US Bankruptcy Code on or about January 29", a statement said.
PG&E stressed that the provision of natural gas and electric service to customers is expected to continue without disruption.
If all the parties involved can't negotiate, PG&E will have to come up with a reorganization plan for how much each party that is owed will receive. PG&E has come under intense scrutiny following the devastating wildfires in California after it emerged that some of its equipment may have sparked the blazes. Her actions coincided with the news that the company would be filing for bankruptcy on January 29.
He said addressing the pending bankruptcy, and potentially avoiding it, is a top priority for his new administration, but he hasn't settled on what actions to take. Here, transmission towers in a valley near Paradise, Calif., as the Camp Fire burns in November 2017. "In the end, California regulators and politicians will have to balance PG&E's financial health with customer costs", wrote Travis Miller, an energy and utilities strategist for Morningstar.
A bankruptcy filing would represent a last resort if the company is unable to get government relief that would allow it to pass on liabilities to customers, a manoeuvre enacted into law to help the company grapple with 2017 fires, the sources added. "Years of drought, extreme heat and 129 million dead trees have created a "new normal" for our state", the company said.
"All Californians sympathize deeply with the victims of our recent catastrophes, which caused dozens of deaths and wreaked unprecedented destruction across the state", said Ralph Cavanagh, California-based energy expert at the Natural Resources Defense Council.
The move, which PG&E has floated for months, will likely mean higher rates for consumers and a longer wait for fire victims suing the utility.
Ginter says a bankruptcy filing could have a number of outcomes, including negotiation with creditors.