Under threat by California Governor Gavin Newsom of a state takeover if it is unable to advance its bankruptcy reorganization in line with a June 2020 statutory deadline, Pacific Gas and Electric Co. said it is "on track to achieve confirmation of our plan in advance [of the deadline] ... and to emerge from Chapter 11 as a financially sound utility positioned to lead California's energy future."
The utility, or PG&E, in September reached an $11 billion settlement with a group of major insurance companies that covers claims the insurers have already paid to wildfire victims. The company must still reach a settlement with thousands of individual fire victims over their uninsured claims. PG&E and its parent company, PG&E Corp., are working on a global resolution to the Chapter 11 case while related state and federal court cases to determine its total wildfire liabilities are still pending, PG&E said in a November 12 email to S&P Global Market Intelligence that responded to the governor's concerns.
"All wildfire compensation is subject to bankruptcy court approval and will be paid pursuant to a confirmed Chapter 11 plan after the effective date of that plan," PG&E said. PG&E will update its restructuring plan "as developments require, including to reflect any additional settlements or the outcome of the ongoing wildfire claims proceedings."
Attorneys for Newsom, in a November 9 filing with the US Bankruptcy Court for the Northern District of California, reiterated the governor's message that if competing financial stakeholders in the utility and its parent company fail to resolve their contentious joint bankruptcy proceedings in a timely fashion, "the state of California will present its own plan for resolution of these cases."
That filing followed public outrage over unprecedented preventive blackouts in October that were aimed at keeping its power lines from sparking wildfires amid dry, windy conditions. More than two dozen local government officials on November 4 asked state regulators to transform PG&E into a customer-owned instead of an investor-owned utility.
The governor also asked Judge Dennis Montali, who is presiding over the cases, to delay a planned Wednesday hearing on the debtors' motion to approve the settlement with insurance companies. That hearing has been rescheduled for November 19.
The court should take more time to review the settlement "in the context of a broader resolution of these chapter 11 cases," the governor's attorneys said. A related restructuring support agreement "is yet another example of legal maneuvering by parties apparently more focused on securing procedural advantages for their own pecuniary interests than on reaching a fair and expeditious resolution of this bankruptcy," they added.
Delaying a decision will force financial institutions "to continue to negotiate and facilitate a global resolution of PG&E's chapter 11 cases," according to the filing.
In its email, the utility did not confirm a $13.5 billion settlement with individual wildfire victims, reported by Bloomberg on November 11, but said it "remains committed to working with the individual claimants to fairly and reasonably resolve their claims and will continue to work to do so."
-- Garrett Hering, S&P Global Market Intelligence, newsdesk@spglobal.com
-- Edited by Gail Roberts, newsdesk@spglobal.com