PG&E bankruptcy plan wins OK from California regulators, clearing hurdle for wildfire victims
California regulators approved PG&E Corp.’s bankruptcy plan Thursday, saying they’ve imposed strict new rules to overhaul PG&E’s culture and operations but acknowledging that only the utility’s managers can prevent a repeat of the devastating mega-wildfires that landed the company in bankruptcy.
The 5-0 decision by the Public Utilities Commission makes it all but certain that PG&E will meet the Legislature’s June 30 deadline for finalizing its bankruptcy case, qualifying PG&E for a share of a $21 billion state-run fund designed to cushion the state’s largest utilities from the crippling effects of future fires.
Under the plan approved by the state, PG&E will have to overhaul its board of directors, carve itself into regional operating units and submit to the oversight of a safety monitor who will report to the PUC. If it fails to improve its safety record, it might have to forfeit its operating license to the state, a move that would likely result in the company being put up for sale.
For all that, commissioners said it’s truly up to PG&E to make meaningful changes after the October 2017 wine country fires and the November 2018 Camp Fire in Paradise. More than 120 people died in those fires and tens of thousands of homes were destroyed, driving PG&E into bankruptcy in January 2019.
“Only so much can be imposed on this company externally, by a regulator,” said PUC President Marybel Batjer, who blasted the company for “years of mismanagement.”
The company has to be willing to turn itself into a company where “Main Street is far more important than Wall Street,” she said.
Meeting remotely because of the COVID-19 pandemic, the commissioners heard more than two hours of comments from critics who pleaded with them to reject PG&E’s plan and turn the company’s ownership over to government or some other form of public control.
The commissioners acknowledged the doubts about PG&E’s ability to reform itself, but said accepting the reorganization represents the swiftest method of getting billions of dollars in compensation into the hands of the roughly 80,000 victims of the wildfires caused by PG&E’s faulty equipment.
“Until this bankruptcy is resolved, no victim can receive compensation,” said PUC member Cliff Rechtschaffen.
The central piece of PG&E’s reorganization is a $13.5 billion fund - half cash, half stock - to repay victims. The victims themselves, voting by mail, approved the payout, with more than 85 percent voting yes, earlier this month.
The PUC’s approval follows months of negotiations between PG&E and Gov. Gavin Newsom. The governor rejected PG&E’s first plan last fall, saying it didn’t go nearly far enough to transform the company’s leadership and safety structures.
He was also furious with a series of deliberate blackouts imposed by PG&E last October during windstorms. After the utility agreed to a more thorough overhaul of its leadership and other changes, Newsom signed off on the plan and the PUC tweaked it further.
PG&E must still get final approval from U.S. Bankruptcy Judge Dennis Montali, who heard testimony via Zoom on Thursday from PG&E’s chief financial officer Jason Wells as part of a multi-day hearing on the proposed reorganization.