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PG&E, State Regulators Float Reorganization Plans

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PG&E may come out of bankruptcy sooner than expected.
PG&E may come out of bankruptcy sooner than expected. (Justin Sullivan/Getty Images)

PG&E is back in bankruptcy court Wednesday. The utility has until this fall to submit an official reorganization plan, but some are reporting that the company could exit from bankruptcy faster than anticipated.

U.S. Bankruptcy Judge Dennis Montali will hear arguments on when the court will consider that reorganization plan. Even after the utility files the plan, it will need approval from Montali and state regulators.

That reorganization plan is still being formulated. But Bloomberg reported on Friday that it could be unveiled in August, with a timeline that would see PG&E emerge from bankruptcy as early as next March.

On Wednesday, Montali will also hear arguments on whether a wildfire victims' lawsuit, filed after PG&E entered bankruptcy protection, can move forward.

PG&E declined to comment on the Bloomberg report.

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"We are looking at all options when it comes to working with the governor and all stakeholders, and are committed to resolving wildfire victims' claims fairly and expeditiously, mitigating wildfire risks, continuing to deliver safe and reliable energy to our customers, and supporting the state's bold clean energy goals, while keeping customer rates and bills as low as possible," PG&E said in a statement to KQED.

State Eyes Reorganizing PG&E

When shareholders met in San Francisco on Friday, Governor Gavin Newsom announced a proposal to create a huge new wildfire insurance fund to help protect the financial stability of California's investor-owned electrical utilities. But PG&E would first have to exit bankruptcy and settle with fire victims before having access to the fund, which could be as large as $21 billion.

Meanwhile, state regulators are also exploring four ways to restructure the utility:

  1. Separating PG&E into separate gas and electric utilities;
  2. Establishing periodic review of PG&E’s Certificate of Convenience and Necessity
  3. Modifying or eliminating PG&E Corp.’s holding company structure;
  4. Linking PG&E’s authorized rate of return or return on equity to safety performance metrics.

Public comments are due by July 19.

CEO Johnson Promises Change

Over the past few weeks, PG&E has been intent on turning the page on this latest, dark chapter in its history.

Earlier this month, the company announced that it would pay $1 billion to 14 cities and counties to settle lawsuits filed in the wake of catastrophic wildfires linked to the company's equipment, including the town of Paradise.

Can PG&E Change?

And on Friday, new CEO Bill Johnson tried to reassure investors at the company's annual shareholder’s meeting, fielding questions on everything from PG&E’s safety record to executive compensation — including a plan that makes him and other top executives eligible for almost $11 million in performance-based bonuses this year.

Johnson seemed responsive.

When shareholder Eric Petersen of Salinas complained that a PG&E representative had “bolted” without taking questions at a recent city council meeting, Johnson promised change.

“No PG&E person who is attending a public meeting and there to answer questions will bolt again before you have the opportunity to talk to them. How’s that?,” Johnson replied.

When another shareholder complained that she’d called the utility several times to flag power lines on trees in her neighborhood, Johnson promised her a meeting with Michael Lewis, PG&E's senior vice president of electrical operations.

And when a PG&E lineman, and member of International Brotherhood of Electrical Workers, told Johnson he’d brought some letters that would reveal time-sensitive safety problems he’s witnessed, Johnson promised to read them and get in touch.

“I’m not sure how transparent your team has been with you since you arrived,” the lineman told Johnson.

But not everyone was convinced that Johnson could turn the utility’s culture around.

“I think they’re fairly insulated, they live in their own little world. And that kind of makes sense because they’ve got to get things done that we don’t understand,” said shareholder John Schiebe, who lives in the Bay Area community of Belmont. “I just don’t want to see another San Bruno or another Butte County and unfortunately, that’s probably more likely to happen than not.”

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