PG&E Closer To Crossing Bankruptcy Hurdle
Sonora, CA — A federal has signed off on a deal to refinance billions of dollars in debt to pay off PG&E bondholders, getting the company one step closer to getting out of bankruptcy.
The bondholders had an alternative plan for getting the nation’s largest utility out of debt but have now agreed to support the company’s blueprint instead. PG&E now appears to be well-positioned to emerge from bankruptcy by June 30.
There is one stumbling block facing the company, however, staunch opposition from California Gov. Newsom and other elected officials. They have threatened a government-backed takeover of PG&E unless additional dramatic changes are made. In fact, on Monday, one lawmaker introduced a bill that would force taxpayers to buy the struggling utility and turn it into a public entity with a safety-first mission ahead of shareholder profits, as reported here.
A wildfire insurance fund created by the state gives the governor, state lawmakers and the California Public Utilities Commission, the state’s chief regulatory agency, leverage over the company. The state program is a key component in PG&E’s reorganization as state approval is needed by the June deadline to qualify for the funds. In a sign of its confidence at Tuesday’s hearing, PG&E work out a timetable that would enable the company to put the bankruptcy behind it just 17 months after the process began. That would be much faster than the three years it took PG&E to reorganize when it filed for bankruptcy in 2001.
PG&E is setting up a $13.5 billion fund to pay the wildfire victims. The deal is a big point of contention, as the judge found out after being inundated with letters from victims worried that too much of the money will go to attorneys and government agencies seeking reimbursement and not them. Noting those concerns the judge set a Feb. 21 deadline for the lawyers to provide a clear explanation of how victims will file claims, with a timeline explaining how they can expect to be paid. Then a more extensive breakdown must be filed on March 10.
On top of the victim’s fund, PG&E has also negotiated settlements totaling $25.5 in the past few months to reconcile with homeowners, businesses, insurers and government agencies who had claimed more than $50 billion in losses from wildfires blamed on the company’s mismanagement and failing aging equipment.