SAN FRANCISCO — PG&E Corp. proposed Monday to resolve its bankruptcy case by offering nearly $18 billion to settle claims from devastating wildfires started by its equipment in recent years — an amount immediately criticized by victims who said less than half of that is intended for them.
The preliminary plan filed in federal court is part of its effort to exit from Chapter 11 bankruptcy protection by next year.
PG&E sought the protection in January because it said it could not afford billions in damages from wildfires in 2017 and 2018 that were caused by company equipment. That included the Camp fire in November — the deadliest blaze in California history — that killed 86 people and largely destroyed the Butte County town of Paradise.
Cal Fire concluded this year that private equipment sparked the 2017 Tubbs fire that destroyed some 4,600 homes in Sonoma and Napa counties, killing 22 people; but victims of that inferno say Cal Fire got it wrong, and they have filed a civil case seeking to hold PG&E liable for damages.
The company said in court papers it was confident it could raise more than $30 billion in debt and equity financing from the largest banks in the nation. The strategy would not result in rate increases for its customers, PG&E said.
“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,” CEO and President Bill Johnson said in a statement.
PG&E is under deadline pressure to emerge from bankruptcy by June 2020 in order to participate in a state wildfire fund to help California’s major utilities pay future claims as climate change makes wildfires across the U.S. West more frequent and more destructive.
The plan, which must be approved by state regulators, proposes setting aside two trusts totaling $16.9 billion to pay victims and insurance companies. Another $1 billion will go toward local governments affected by the wildfires.
PG&E’s plan was blasted by fire victims.
“The proposal is just a fraction of what wildfire victims need to rebuild their lives,” said Santa Rosa resident Patrick McCallum, a lobbyist and co-chairman of wildfire victims group Up from the Ashes.
McCallum and his wife, Sonoma State University President Judy Sakaki, lost their Fountaingrove neighborhood home in the Tubbs fire. They were forced to give up their plans to rebuild the home and resell it because of cost of construction far outpaced their insurance coverage, McCallum said.
PG&E is “playing hardball with victims and it’s tragic since they caused the damage that these victims are suffering,” McCallum said.
An attorney for the committee of wildfire victims involved in the bankruptcy case said she thinks they are owed far more, and will urge the committee to oppose the plan.
“Huge disappointment in their attitude toward compensating victims of the fires,” Cecily Dumas said of California’s largest utility.
The plan’s filing came three days after San Francisco leaders offered to buy pieces of PG&E’s assets for $2.5 billion so the city can run parts of the power system on its own.
Mayor London Breed and City Attorney Dennis Herrera said in a statement that the offer was “competitive, fair and equitable” and would lead to financial stability for the beleaguered investor-owned utility.
About 452,000 of the utility’s 5.4 million electric customers are in San Francisco.
San Francisco, where PG&E was founded more than a century ago, began examining options for taking over pieces of the utility after it filed for bankruptcy protection. The city isn’t looking to buy any part of PG&E’s gas system.
A May report by the San Francisco Public Utilities Commission said public ownership of the electric grid could help the city become carbon neutral by 2030 and stabilize electricity rates. The city already has its own power system but relies on PG&E to deliver electricity to many customers. Money for the purchase would come from a bond that voters agreed last year the city could use. State and federal regulators would need to sign off on any deal.
Cities previously could use eminent domain to take ownership of assets at fair market value. But under a new law passed by state lawmakers in July, the Public Utilities Commission will get to consider other costs in deciding any local government’s purchase of utility assets.
Breed, along with San Jose Mayor Sam Liccardo and Oakland Mayor Libby Schaaf, told lawmakers that expanding regulators’ oversight would infringe on cities’ authority to provide electric service in the future.
By Daisy Nguyen (AP) & Julie Johnson
Source: The Press Democrat