Billion Dollar Settlement Reached With PG&E On California Fires
Sonora, CA – A deal has been reached for Pacific Gas & Electric to pay $11 billion to a group of insurance companies representing claimants from deadly Northern California wildfires in 2017 and 2018 as the company tries to emerge from bankruptcy.
Those insurance companies hold 85% of the claims from fires including the Camp Fire that destroyed the town of Paradise, killing 86 people. In a statement, the utility says the tentative agreement was reached with the insurance does not include thousands of uninsured and underinsured fire victims who have filed their own claims against the company, which includes wrongful deaths.
In a separate statement, the insurers acknowledged that the settlement is well below the $20 billion originally being sought in bankruptcy court, although it is more than PG&E offered as part of a filing in bankruptcy court earlier this week.
“While this proposed settlement does not fully satisfy the approximately $20 billion in group members’ unsecured claims, we hope that this compromise will pave the way for a plan of reorganization that allows PG&E to fairly compensate all victims and emerge from Chapter 11 by the June 2020 legislative deadline,” stated the insurers.
Upon the news of the agreement, PG&E’s stock rose 7% in Friday trading as it removes some of the uncertainty hanging over the company as it tries to stem its financial woes.
“Today’s settlement is another step in doing what’s right for the communities, businesses, and individuals affected by the devastating wildfires,” stated PG&E CEO Bill Johnson via a written statement.
There are still two major questions hanging over the bankruptcy, according to state wildfire committee member Michael Wara. Those include how much PG&E will pay the outstanding fire victims, and whether a jury will find the utility liable for the 2017 wine country Tubbs Fire that took 22 lives.
“It’s really hard to know what the PG&E bankruptcy resolution will look like. Because you don’t know how much money the company has to come up with,” comments Wara. He adds, “We want to avoid having ratepayers get punished for this bankruptcy, but the company provides this essential service,” he said. “How that gets resolved is going to be a very tricky process.”
The settlement still must be approved by a bankruptcy court.