Deal to settle PG&E bankruptcy heads to California PUC
Pacific Gas & Electric struck a deal with the governor of California to exit bankruptcy proceedings and is now awaiting approval from the California Public Utilities Commission (CPUC) and also a federal bankruptcy judge.
The utility company said in a motion filed with the bankruptcy court that it was prepared to halt dividend payments for three years for a savings of some $4 billion and would also spare its ratepayers from footing the bill for compensation paid to victims of the deadly wildfires that caused massive damage in 2017 and 2018 and pushed the company into Chapter 11 bankruptcy.
“We now look to the California Public Utilities Commission (CPUC) to approve the Plan through its established regulatory process so that we can exit Chapter 11, pay wildfire victims fairly – and as soon as possible – and participate in the state’s wildfire fund,” Bill Johnson, CEO and president of PG&E Corp., said in a statement.
The company said a hearing on the deal would take place on May 27 in bankruptcy court. A timeline for the plan’s consideration by the CPUC was still pending on Monday, but PG&E remains committed to gaining the agency’s approval and emerging from Chapter 11 by June 30. The company and Gov. Gavin Newsom agreed to begin a sale process “in the unlikely event” the deadline is not met.
Newsom has been a staunch opponent of a “business as usual” resolution to the bankruptcy case; he had stated previously that he did not want PG&E to take on staggering debt and emerge from Chapter 11 in a weakened state. His approval of the new deal appears to remove any major roadblocks to the plan, which would avoid a state-led takeover or a sale of the utility. PG&E said Newsom’s office told the court in a brief filed last week that the proposal would meet the requirements of state legislation – Senate Bill 901 and Assembly Bill 1054 – governing the wildfire fund and the financing plan.
The other major provisions of the agreement include:
• Supporting the CPUC’s enactment of measures to strengthen PG&E’s governance and operations, including enhanced regulatory oversight and enforcement that provides course-correction tools as well as stronger enforcement if it becomes necessary.
• Agreeing to host an official observer from the state who will report back on the company’s progress on safety goals before its emergence from Chapter 11.
• Pursuing a rate-neutral $7.5 billion, 30-year securitization transaction after PG&E emerges from Chapter 11.
• PG&E agreed to not seek rate hikes to cover the approximately $25.5 billion that will be paid to victims of the 2017-2018 when PG&E emerges from Chapter 11.
Johnson said the new strategy would position PG&E to achieve its major goals of providing reliable energy service to its approximately 16 million customers while also making major system upgrades to prevent future fires while expanding its renewable energy portfolio.
“We reaffirm our commitment to delivering safe and reliable electric and gas service and implementing needed changes across our business to become a new and transformed company that is positioned to meet our commitments to California and our customers,” he said.
