Camp Fire area assemblyman weighs in on wildfire victims, PG&E battle
PG&E Corp.’s major shareholders said Friday that a bill the company deemed necessary to pay wildfire victims was dead in the Legislature until January.
In a statement released by spokesman Steve Maviglio, the hedge funds that own half of PG&E’s stock said Assembly Bill 235, which didn’t even formally go into print until Friday, wasn’t going to pass in the waning days of the legislative session and would resurface in January.
The defeat of the bill could complicate PG&E’s efforts to exit bankruptcy and ward off a hostile takeover attempt by a separate group of hedge funds that control billions in PG&E bonds. The bondholders had waged a furious campaign at the Capitol, on the radio airwaves and on the internet, deriding the shareholder plan as a “PG&E bailout.” By scuttling the bill, at least for now, they could be in better position to pursue their takeover effort in bankruptcy court.
PG&E had touted AB 235 as the quickest and fairest way to pay billions in claims to victims of the 2017 and 2018 wildfires, which drive the utility into bankruptcy in January. The bill would have had the state issue tax-exempt, low-interest bonds on PG&E’s behalf to pay the claims. The utility insisted that under AB 235, by Assemblyman Chad Mayes, R-Yucca Valley, PG&E shareholders would have repaid the bond debt out of future profits.
But the bondholder group called that a sham, saying PG&E was simultaneously petitioning the Public Utilities Commission for billions of dollars worth of rate increases to fatten its profits. Lawmakers were skeptical of the PG&E proposal, in no small part because of their hostility to a company that was deemed responsible for some of the worst wildfires in California history. Last November’s Camp Fire killed 86 people and destroyed much of Paradise.
PG&E is under pressure to come up with a repayment plan soon. It expects to file a reorganization proposal Monday in US Bankruptcy Court in San Francisco. It must exit bankruptcy by next June 30 to be eligible to participate in a wildfire insurance fund established earlier this summer by the Legislature.
“Simply, there is not sufficient time left for proper debate. We’re putting AB 235 off until the new year. We need to ensure that victims get paid and ratepayers are protected,” Mayes said.
PG&E’s stock fell 37 cents a share Friday and closed at $10.19. The shares have lost nearly half their value since early August on growing fears about the company’s future. The bondholders’ takeover plan would wipe out most of the value of existing investors’ shares.
Of AB 235, Maviglio said, “We are pleased that the bill will be in print but the timing was simply not. Right to pass this legislation with just days left in the session. During the interim, we will continue to work to resolve the bankruptcy case and help PG&E fulfill its commitments. We will return in January with a renewed effort to getting this beneficial legislation the full and fair consideration it deserves.”
PG&E in a written statement said it was pleased that lawmakers would reconsider the proposal next year.
“We firmly believe that Wildfire Victim Recovery Bonds are a critical element to the state’s path forward when it comes to addressing wildfire risk. AB 235 would ensure that victims of the 2017 and 2018 wildfires are paid quickly at shareholders expense, without increasing customers’ bills,” the company said.
Assemblyman James Gallagher, R-Yuba City, opposed the bill and said in a statement that he just wants victims from Paradise to get compensated for their wildfire claims.
“There’s been quite a bit of political spin on both sides of this issue,” Gallagher said. “For me, my priority is the Town of Paradise and the surrounding communities that have been devastated by the Camp Fire. There are gaps that need to be filled in order to help my district recover. I remain hopeful that PG&E will step up to the plate and do the right thing to assist – regardless of who controls the company.”