| Independently Powered Energy News

Updated May 21

Most of the tens of thousands of victims of fires in 2015, 2017 and 2018 that were sparked by Pacific Gas & Electric agreed to the company’s pending $13.5 billion cash and stock settlement. PG&E said May 18 that there has been “overwhelming acceptance of the plan” by the surviving victims—those who lost homes, other property and jobs. That keeps the company on track to exit bankruptcy by June 30.

During the voting period, there was considerable controversy over the fact that some of the settlement will be paid in shares of the reorganized company. The vote ended May 15.

Ballots in the $13.5 settlement are now being audited by the federal Bankruptcy Court for the Northern District. Results will be released by May 22. Judge Dennis Montali is to hold a May 27 confirmation hearing on the entire $58 billion reorganization plan.

Closing the Chapter 11 doors by the end of June allows PG&E to tap into the $21 billion legislatively created wildfire pot funded by ratepayers and shareholders of all three private electrical utilities.

“Victims of the wildfires cannot receive compensation for their losses until PG&E exits bankruptcy, and it is a statutory requirement for PG&E to access the wildfire fund going forward,” according to a proposed California Public Utilities Commission decision. It would largely approve the company’s $58 billion reorganization plan. The proposal was set for a May 21 Commission vote but postponed to May 28.

The CPUC proposal by Administrative Law Judge Peter Allen, while mostly signing off on the financing plan, does not allow the utility to recover expenses for its outside bankruptcy lawyers, financial experts and accountants–a total in the hundreds of millions of dollars for the 17 months mired in Chapter 11. For the month of March alone, the bill was $46,557, PG&E reported May 15. Late last year, the U.S. Trustee warned that PG&E’s bankruptcy case was “likely to rank eventually among the most expensive” ever filed.

Allen directs the company to pay the CPUC’s costs of bankruptcy professionals. As of the end of January, the Commission spent $10 million of its approved budget of $28 million, said spokesperson Terrie Prosper. It spent $24 million on profession fees in the first PG&E bankruptcy.

The company is allowed to recover $154 million in costs for refinancing some of its debt to get lower interest rates, estimated by PG&E to save $1.4 billion. It also is given permission to waive for five years its equity to debt ratio, currently 52% to 48%. Waiving this set capital structure allows PG&E, if approved, to take on more debt.

The pending CPUC decision also notes that one of the critical components of approving the reorganization is addressing PG&E's safety history. “PG&E seems reluctant to take ownership of its own safety history and acknowledge its failings,” and that is a cause for concern, it points out. Since 2010, there have been several large and small incidents “that show that PG&E has a serious safety problem that has remained unresolved, despite the imposition of massive fines by this Commission and other penalties, including a criminal conviction.” The latest penalty imposed was $1.94 billion for the 2017-2018 wildfires. Earlier, PG&E pled guilty to 84 criminal charges for starting the 2018 Camp Fire that wiped out the town of Paradise and killed 84 people.

PG&E has and will remain under increased regulatory scrutiny because its “safety performance has been so abysmal,” the proposed ruling says.

In an attempt to address what some view as the utility’s unmanageable vast territory, it requires that by June 30 PG&E appoint executive officers for each region. They will report to the company’s head. New regional safety staff are to report to the chief safety officer. An independent safety monitor also is to be appointed but Allen declines to require the creation of a safety subcommittee on grounds that it would be redundant.

A handful of related PG&E financial issues will be handled in other commission proceedings. That includes a $7.5 billion “securitization” plan to cover the wildfire claims after it exits bankruptcy. Securitization generally refers to backing financing costs with ratepayer income.

Also separate are the terms of executive compensation and severance packages, and safety metrics. The latter is addressed in the CPUC’s ongoing PG&E Safety Culture Investigation.