PG&E power company chooses bankruptcy in response to California's devastating fires

PG&E power company chooses bankruptcy in response to California's devastating fires

PG&E power company chooses bankruptcy in response to California's devastating fires

PG&E says Chapter 11 bankruptcy protection will allow the company to reorganize and try to handle potential liability for wildfires in 2017 and 2018.

Shares of PG&E crashed to $8.38 per share on the back of the bankruptcy news, plummeting more than 52%.

This comes one day after the chief executive of the company stepped down.

PG&E's regulator, the California Public Utilities Commission, began in late December to investigate whether the company should make significant structural changes, including becoming owned by the state or splitting up its businesses.

Companies negotiate debtor-in-possession loans, often with existing lenders, when they are seriously considering bankruptcy protection so they can continue operations while working through court proceedings.

State fire investigators said they have determined that PG&E's power lines sparked 18 wildfires in October 2017 that burned almost 200,000 acres, destroyed 3,256 structures and killed 22 people.

PG&E, which is the nation's largest utility by revenue and is based in San Francisco, said it is giving the required 15 days' notice that it plans to file for bankruptcy protection.

Newly-sworn-in Governor Gavin Newsom also promised that electricity and gas service would continue to millions of Californians.

PG&E's safety record has come under sharp scrutiny before. Williams had served as CEO since March 2017, before the fatal blazes.

Both lawmakers and regulators may be constrained in how much more they can help PG&E, at least by allowing it to further raise electricity rates.

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California law requires utilities to pay damages for wildfires if their equipment caused the blazes - even if the utilities weren't negligent through, say, inadequate maintenance.

Republican Assemblyman James Gallagher, who represents the Camp Fire area, says PG&E had better come out of bankruptcy in very different shape.

He said addressing the pending bankruptcy, and potentially avoiding it, is a top priority for his new administration, but he hasn't settled on what actions to take.

Patterson is the vice chair of the Assembly's Utilities and Energy Committee.

The legislature and the governor could decide to allow PG&E to pass along the costs associated with victim lawsuits and other fire losses to ratepayers, as they did past year for a series of deadly northern California blazes in 2017.

Moody's investor rating service warned November 15 that the potential liability of 21 major wildfires in 2017 was roughly $10 billion and that the destructive 2018 Camp Fire, which devastated the town of Paradise and killed 86 people, would add further costs.

"This company has been dishonest, it has prioritized profits way over safety and there has been no effort on their part to change that", he said. PG&E said the cause of that fire was still under investigation, but the agency Cal Fire is focusing on several of the utility's transmission lines and towers.

It remains to be seen how PG&E's bankruptcy will affect California's PV sector. "But victims' interests won't be served by pushing utilities into bankruptcy, converting wildfire sufferers into one more class of frustrated creditors pursuing inadequate funds".

A bankruptcy filing is not assured, the sources said. "PG&E is the state's largest investor in energy efficiency and electric vehicle infrastructure, alone, with annual commitments well in excess of $1 billion", he said.

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