Pacific Gas and Electric Co., the California utility, has unveiled its plan for exiting bankruptcy and settling billions of dollars in claims arising from a series of deadly wildfires caused by its equipment.
The reorganization plan ― filed with U.S. Bankruptcy Court in San Francisco on Monday ― includes nearly $18 billion in settlements for wildfire victims, insurance companies and local governments impacted by the devastating fires.
PG&E described the amount as “fair” compensation. But lawyers representing fire victims lambasted the proposal as “extremely disappointing.”
“We are not surprised that it is not an acceptable plan, but we are disappointed that it’s worse than expected,” attorney Cecily Dumas told The Wall Street Journal.
Lawyer Michael Kelly, who’s also representing wildfire victims, told Reuters that the plan was “not in any way, shape or form satisfactory or fair.”
PG&E’s Chapter 11 proposal is likely just the first iteration in what promises to be a difficult and lengthy negotiation over a final bankruptcy plan, the Journal noted.
PG&E shareholders will get a vote on the plan, as will wildfire victims; and state regulators will need to approve the final plan.
PG&E filed for bankruptcy protection in January because it said it couldn’t afford to cover more than $30 billion in liability costs linked to wildfires in California in 2017 and 2018.
State officials have said the wildfires ― including the 2018 Camp Fire, the worst wildfire in California history ― were caused by electrical transmission lines and other equipment owned by PG&E. The fires led to more than 100 deaths and the near-total destruction of entire communities like the city of Paradise.
In its Chapter 11 proposal this week, the San Francisco-based power company said it wasn’t sure how it would raise the money it needs to resolve its bankruptcy, but expressed confidence it could amass billions of dollars in debt and equity financing from banks like JPMorgan and Goldman Sachs.
The plan includes settlements capped at $8.4 billion for wildfire victims, $8.5 billion for insurance companies and $1 billion for local governments. PG&E’s existing power contracts ― including those related to the purchase of renewable energy, described as critical to helping California meet its climate change goals ― would be honored, Reuters reported.
“Under the plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California’s clean energy goals,” PG&E CEO Bill Johnson said in a statement.
PG&E is under pressure to quickly finalize a bankruptcy plan, according to The Associated Press. Only if the company is able to meet a June 2020 deadline will it be able to participate in a new state wildfire fund, which will help California’s utilities cover liabilities related to future wildfires.
PG&E’s plan follows an offer by San Francisco leaders to acquire some of the utility’s assets. San Francisco made a $2.5 billion offer on Friday for the company’s electrical lines within the city.
PG&E said it would consider the proposal, but said it doesn’t believe the sale would be “in the best interests of our customers and stakeholders.”