Pacific Gas & Electric struggles to find a way out of bankruptcy amid fire-related claims
After an autumn marked by mass blackouts and wildfires, Pacific Gas & Electric is racing to craft a plan to escape bankruptcy. That plan needs to satisfy fire victims and state officials who are threatening to take over California’s largest utility unless executives improve its safety record.
If PG&E doesn’t reach an agreement with victims and other creditors by early next year, the utility might not be able to participate in a new state wildfire fund. A federal bankruptcy judge could also strip control from its management and board, or allow it to be broken up with the pieces sold to the highest bidder.
These tensions surfaced in a court hearing on Tuesday in which PG&E asked a bankruptcy judge to limit its liability for wildfires, and at a legislative hearing that featured the company’s chief executive on Monday in Sacramento, California.
Another big problem for PG&E: California’s fire season isn’t over yet. A dangerous combination of high winds and dry conditions is expected as early as Wednesday morning, and PG&E has said that it could cut power to up to 303,000 customers. That works out to more than 800,000 people — when accounting for shared addresses — in 25 counties across the Bay Area, wine country and the Sierra foothills.
So far this fire season, the utility has preemptively shut off power to nearly 3 million people in northern and central California, some for as many as five days. PG&E has said that the blackouts help guard against fires ignited by the sparks created when windblown tree branches collide with live power lines. But critics, including state and local government officials, have said that PG&E has done a poor job of warning residents about the shut-offs, which have had a disproportionate impact on low-income families who cannot afford generators or batteries, and on older and sick residents who rely on electric medical devices.
For some, the blackouts have amounted to “a big screw-you,” said state Sen. Bill Dodd, a Democrat whose district includes Napa and Sonoma, during a hearing on Monday in Sacramento.
PG&E has warned that it might have to employ such blackouts for up to a decade while the utility makes up for deferred maintenance. On Monday, the company’s chief executive, Bill Johnson, told lawmakers that it aims to move faster and reduce the number of affected customers by one-third or more starting next year. To do so, it is installing backup energy systems like microgrids, underground power lines and weather cameras.
“It’s not acceptable to me to have another year like this,” Johnson said.
Not everyone is willing to wait. State Sen. Mike McGuire, a Democrat who represents the area where the Kincade fire burned 174 homes recently, is one of many lawmakers who has said that the state should consider offering a “public option” for electricity. PG&E has already stumbled twice, he said Monday, with a deadly 2010 gas explosion and several devastating fires in the last two years.
“I think we’re on our third strike,” McGuire said. “They’ve failed us too many times.”
That hostility serves as the backdrop for a fierce battle in bankruptcy court over how much money PG&E will pay wildfire victims, insurance companies, public agencies and other creditors. The company recently lost the exclusive right to propose a plan for resolving its bankruptcy. That opened the door for holders of PG&E’s bonds and the group representing wildfire victims to propose a competing plan. The bankruptcy judge overseeing the case, Dennis Montali, recently appointed a mediator to try to get PG&E and its bondholders and the victims to reach a settlement.