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PG&E Plans To File For Bankruptcy Over Possible Liability In California Wildfires

PG&E Plans To File For Bankruptcy Over Possible Liability In California Wildfires

PG&E Corp, owner of the biggest U.S. power utility by customers, said on Monday it is preparing to file for Chapter 11 bankruptcy protection as soon as this month amid pressure from potentially crushing liabilities linked to California's catastrophic wildfires in 2017 and 2018. "While we are making progress as a company in safety and other areas, the Board recognizes the tremendous challenges PG&E continues to face", Kelly said.

The company said it is in discussions with lenders about receiving more than $5 billion to fund its ongoing operations as it navigates through bankruptcy.

A bankruptcy also would allow PG&E to raise cash by selling assets - such as its gas business and hydropower plants - more easily, he said.

The filing comes a day after the company announced the resignation of its chief executive, Geisha Williams.

A bankruptcy filing could help the company deal with such fundamental problems as the prospect of continually being exposed to financial fallout from future wildfires, the company said.

State investigators have also blamed PG&E power lines for some fires in October 2017.

PG&E lost half its value on Monday after the troubled California utility, which faces huge liabilities over the state's deadly wildfires, said it would file for bankruptcy protection.

As for what may happen with rates for gas and electricity, PG&E spokesperson Lynsey Paulo says that the upcoming bankruptcy is "a long process that we're just announcing today and I can't speculate on what changes, if any, could result".




The plans have not been finalised and the communication could come later, the source said. Williams, three other top executives who resigned last week and the company have come under harsh criticism over the utility's corporate culture.

Few politicians want to rush to the defense of a big utility, but many policy experts argue that PG&E wouldn't be in this position if it weren't for a unique California legal standard that makes utilities strictly liable for damages from wildfires linked to their equipment even if the utilities were not negligent or unreasonable.

"You avoid a situation where some jury in California thinks PG&E is responsible for this fire, so we should hit them up for all these damages and let them sort out how they pay for it", Wynne said.

PG&E also negotiated a US$350-million loan last April with Royal Bank of Canada and two Japanese financial institutions that is "payable immediately" in the event of a bankruptcy or insolvency, according to securities filings.

State officials are investigating whether the utility's equipment sparked the deadliest, most destructive wildfire in California history, a November blaze that killed at least 86 people and burned down 15,000 homes. A number of the fires have been attributed to energy traces' coming into contact with bushes, which critics have mentioned is a result of the utility's failure to trim the bushes.

"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.

A federal judge last week proposed restricting PG&E from using power lines deemed unsafe during high winds in this year's fire season.

"The Natural Resources Defense Council warned that bankruptcy could threaten billions in funding for PG&E's clean energy initiatives, which are key to California's environmental goals". "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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