California regulators approve PG&E bankruptcy plan
Pacific Gas & Electric Company (PG&E) remained on track to emerge from bankruptcy this summer after its plan to reorganize was approved May 28 by the California Public Utilities Commission (CPUC).
The company’s plan for reorganization now needs the final approval of a federal bankruptcy judge in order to emerge from Chapter 11 by June 30, the state’s deadline for PG&E to be eligible to participate in a $21 billion wildfire insurance fund to protect utilities against future liabilities from the state’s notorious and sometimes deadly annual wildfires.
“Since the beginning of the Chapter 11 process, our main goal has been to get wildfire victims paid fairly and quickly,” PG&E CEO and President Bill Johnson said Thursday. “Today’s vote keeps us on track to do so.”
The bankruptcy plan, which was approved May 12 by the Federal Energy Regulatory Commission, was formally submitted to the court on May 27. PG&E had previously reached three settlements totaling $25.5 billion for losses experienced by homeowners, various government agencies, and insurance companies for losses stemming from wildfires in Northern California in 2015, 2017 and 2018.
“We have supported recommendations from the governor’s office, CPUC President (Marybel) Batjer and the other commissioners, and many stakeholders to hammer out a plan that will help PG&E become the utility that our customers and communities expect and deserve,” said Johnson.
Batjer said in a statement that PG&E’s bankruptcy plan satisfied the need to protect ratepayers while at the same time improving the company’s overall fire safety while keeping it on a firm financial footing. “Today’s decision puts in place the guideposts, but to be successful, PG&E needs to embrace the need for fundamental change,” she said.
The CPUC said the plan was largely rate-neutral and would trim PG&E’s current capital costs through lower interest rates on some $12 billion in long-term debt. The plan, according to PG&E, also assumes current labor agreements and suspends PG&E’s common stock dividend “until it has recognized $6.2 billion in non-GAAP core earnings, which PG&E believes will contribute an additional $4 billion of equity to pay down debt and invest in the business.”
Moreover, the plan also calls for an expansion of PG&E’s board of directors and the appointment of an independent monitor once the term of the current federal monitor expires. In addition, PG&E will create positions of Chief Safety Officer and Chief Risk Officer, both of whom will report to the CEO of PG&E’s parent company, PG&E Corporation.
