California gets time to consider bids to take over PG&E
SAN FRANCISCO (AP) — A federal judge agreed Wednesday to give California officials two weeks to sort out competing proposals to seize control of Pacific Gas & Electric and pull the utility out of a bankruptcy tied to billions in wildfire claims.
U.S. Bankruptcy Judge Dennis Montali’s decision came after lawyers for Gov. Gavin Newsom and state regulators requested the time to consider the best plan and keep PG&E Corp. on track to resolve its bankruptcy case by next June.
The San Francisco-based utility filed for Chapter 11 bankruptcy in January after it said it could not afford an estimated $30 billion in liabilities from wildfires that its equipment may have ignited in 2017 and 2018.
PG&E has the exclusive right to submit a plan for paying off its debts and reorganize its finances, but a group of insurance companies and a group of PG&E bondholders want to present their own proposals.
The insurers filed court papers Tuesday claiming PG&E owes them about $20 billion in reimbursements for wildfire claims. Under their plan, many of their claims against PG&E would be converted into new stock, giving them sizable ownership of the company’s shares and allowing them to establish what they described as a “well-funded” trust for wildfire victims.
Meanwhile, the bondholders have offered at least $16 billion to pay wildfire claims as part of a deal that would give them a majority stake in the company.
PG&E has until Sept. 26 to submit its own plan. The utility said it has made “significant progress in developing a viable, fair and comprehensive plan of reorganization that will compensate wildfire victims, protect customer rates, and put PG&E on a path to be the energy company our customers need and deserve.”
Because the reorganization would need approval fron the California Public Utilities Commission, state officials want to allow competition so they can consider the best plan for California ratepayers, said Alan Kornberg, an attorney representing the state regulator.
PG&E is under pressure to get out of bankruptcy by next June in order to participate in a $21 billion wildfire insurance fund created by state lawmakers to help pay out future wildfire victims.
The fund is aimed at financially stabilizing the state’s three largest investor-owned utilities — PG&E, Southern California Edison and San Diego Gas & Electric — as climate change makes wildfires across the western U.S. more frequent and more destructive.