Pacific Gas & Electric on March 18 appealed a modified wildfire settlement decision with the California Public Utilities Commission, saying the terms of the settlement do not allow PG&E to pay a $200-million penalty out of the wildfire victim trust fund.

PG&E representatives requested that CPUC Administrative Law Judge Sophia Park allow the utility to pay the $200-million fine, or any other wildfire fine, out of the fire victim trust fund, but after victims had been paid.

"While PG&E opposes any fine, if there were to be a fine, it should be paid out of the victim trust," the utility's appeal says.

PG&E representatives also said the utility's shareholders must not be required to forfeit a potential $518 million in future tax savings due to the settlement payment. Forfeiting shareholder tax savings "invites PG&E to violate the Internal Revenue Service's normalization rules," the utility's appeal says.

In its wildfire investigation, the CPUC found that PG&E violated 33 utility code rules associated with the 2017 Northern California wildfires and 12 code rules associated with the 2018 Camp Fire, which killed 85 people.

In December, PG&E agreed to a $1.7-billion settlement with the CPUC's Safety and Enforcement Division, the Coalition of California Utility Employees and the CPUC's Office of the Safety Advocate. But in February, Park modified the settlement decision, increasing the total amount to about $2.1 billion due to "the widespread harm resulting from the 2017 and 2018 fires; the uncertainty that PG&E would otherwise recover from ratepayers a substantial portion of the costs identified in the settlement agreement; the anticipated tax savings for PG&E associated with its shareholder payments; and the importance of fines to punish and deter future misconduct," according to the modified decision (see CEM No. 1579).

PG&E said Park's modified decision jeopardizes its reorganization plan, which must be approved before the end of June in order for PG&E to have access to the state's wildfire fund. Park's decision would allow each of PG&E's financing parties, which have committed to providing $9 billion in equity (see related story), to terminate its equity commitments, according to the utility. The decision increases PG&E's total payments to wildfire victims to $25.5 billion, an amount that under the backstop financing commitment agreement allows each financing party to back away from its promise.

"Given the current unprecedented stock market volatility and decline in PG&E's stock price since [Park's decision] was issued, backstop parties may choose to terminate their commitments and deploy their capital in other investments that may now appear more attractive," PG&E said. "Hence, the proposed modifications to the settlement create a serious risk that the equity funding for the [reorganization plan] may fall away, leaving PG&E unable to pay victims and unable to meet the June 30, 2020, deadline for resolving its Chapter 11 cases."

The CPUC Safety and Enforcement Division on March 18 said it supported the proposals in PG&E's appeal.

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Staff Writer

David Krause is an energy reporter covering the California Energy Commission and Air Resources Board. He writes about transportation, climate change, utilities, and wildfires. He has an MFA in Writing, an MA in English, and a BS in Civil Engineering.