See the upcoming Sept. 13 issue of CEM for more detailed coverage.
Pacific Gas & Electric on Sept. 9 filed a reorganization plan with the court overseeing its bankruptcy proceeding, offering to allocate $17.9 billion to settle claims filed against it in connection with the Northern California wildfires.
The filing, which details PG&E's strategy for restructuring its debt and exiting bankruptcy, marks a pivotal moment in its Chapter 11 reorganization process since it filed for bankruptcy protection in January. In an accompanying news release, the company said it is in discussions with various financial institutions to raise equity financing commitments amounting to $14 billion. The plan would retain PG&E's contracts, renewable-energy power-purchase agreements and servicing agreements with community choice aggregators, and would not increase ratepayer bills, the company said.
Under PG&E's proposal, "impaired" parties—that is, stakeholders that would not receive the full amounts of their claims—would include local governments and public entities that have filed wildfire claims against the utility; subrogation claim holders; and wildfire victims. PG&E is offering to pay out up to $8.5 billion to resolve subrogation wildfire claims filed by insurance companies, as well as an additional $8.4 billion to wildfire victims. The plan also includes a $1-billion settlement between PG&E and a group of local-government entities—including the governments of Paradise, Butte and Yuba counties and the Calaveras County Water District—along with a separate $10-million fund to cover the entities' legal fees.
"Under the plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California's clean energy goals," PG&E Corp. CEO and President Bill Johnson said in a written statement.
According to PG&E, the plan complies with AB 1054, legislation signed by Gov. Gavin Newsom in September that requires the utility to exit bankruptcy by June 30, 2020, in order to access the state's new wildfire fund. The company is committing to an initial contribution of around $4.8 billion to the fund, followed by annual payments of $193 million. The company will need to garner the support of a majority of its "impaired" creditors, as well as approval from the California Public Utilities Commission, in order to confirm the reorganization proposal.
Separately, the City and County of San Francisco on Sept. 6 offered to acquire PG&E's electric utility assets for $2.5 billion. In a joint letter to utility executives, San Francisco Mayor London Breed and City Attorney Dennis Herrera said the bid could provide PG&E with a "significant cash infusion," which could increase its value as part of the bankruptcy process.
PG&E seemingly rebuffed the offer in a written statement, saying it does not believe that municipalization of the utility is in the best interests of its customers and stakeholders, but that it is "open to communication on this issue."