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

US wildfires push energy firm PG&E to bankruptcy protection

US wildfires push energy firm PG&E to bankruptcy protection

California's largest power company is declaring bankruptcy as it faces billions of dollars in liabilities linked to catastrophic wildfires over the past two years.

The company said financial alternatives to bankruptcy would not serve the best interests of PG&E and its shareholders and "would not address the fundamental issues and challenges PG&E faces".

PG&E said in a company filing Monday that it has only about $1.5 billion in cash and cash equivalents on hand.

PG&E said in a securities filing it could potentially raise more money and avoid seeking bankruptcy protection, but argued such a move would be complex, uncertain and expensive.

Monday's announcement comes just a day after the company said its CEO is stepping down. The president of the California Public Utilities Commission had in November widened his investigation of PG&E to include its "safety culture" more generally.

PG&E does not expect any impact to electric or natural gas service for its customers as a result of the Chapter 11 process, which was enacted to help brace for the large amount of liabilities that the company is on the hook for in wake of the devastating Northern California wildfires in both 2017 and 2018. While PG&E's equipment has been named the cause of multiple recent fires, experts blame climate change for extending California's wildfire season and making blazes more deadly and destructive.

PG&E stressed that the provision of natural gas and electric service to customers is expected to continue without disruption. Additionally, the utility's CEO Geisha Williams resigned.

California law says utility companies can be held liable for fire damage caused by their equipment, even if they weren't negligent in maintenance.

Officials also are investigating whether a PG&E high-voltage transmission line was responsible for last year's Camp Fire, which resulted in 86 deaths and was the deadliest fire in California history.

"The report of PG&E's likely bankruptcy is deeply concerning news for the state, fire victims, and ratepayers", California State Assembly member Chris Holden, a Democrat, said in a statement. "I have directed the San Francisco Public Utilities Commission to study any near and long-term impacts this bankruptcy will have on our city and to identify any and all options we have to ensure that everyone in San Francisco has access to clean, safe, and reliable power". He said the utility should "honor promises made to energy suppliers and to our community".

PG&E spent millions in an 11th-hour lobbying effort at the end of the California legislative session in August in a failed attempt to change the law to reduce its financial liability in wildfires.

"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.

As for the lawsuits, PG&E will negotiate with the plaintiffs and its other creditors a reorganization plan based on how much the utility is able to pay, said Hugh Wynne of Sovereign Research, an investment research firm.

It remains to be seen how PG&E's bankruptcy will affect California's PV sector.

They warned that allowing the utility's finances to collapse could threaten some of California's most ambitious plans, including a goal to shift the state entirely to green energy by 2024 and a long-standing push to create an electrified high-speed rail network.

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