PG&E has filed the framework for its exit from bankruptcy protection in a plan that earmarks nearly $18 billion for claims related to recent wildfires caused by the utility.
The plan, which was filed in U.S. Bankruptcy Court in San Francisco on Monday, sets the stage for a fight that pits the embattled utility against wildfire survivors. But PG&E executives said it will steady the company's shaky finances, which prompted it to enter into Chapter 11 in January.
"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 CEO Bill Johnson said in a statement.
Johnson also said the plan will enable the company to deliver on his promise to reorient the company culture toward safety.
"I am confident that we can, and will, provide better service to our customers and communities, and our plan of reorganization is another step in this process," Johnson said.
The company says its plan will put it on track to emerge from Chapter 11 bankruptcy protection by June 30 of next year, a deadline it must meet in order to qualify for a new state wildfire fund enacted by the Legislature and Gov. Gavin Newsom this summer.
But PG&E's proposal could end up disappointing survivors of wildfires caused by PG&E. It caps payments for wildfire victims at $8.4 billion and $8.5 billion for insurers.
An additional $1 billion settlement has already been negotiated with municipalities affected, including Paradise. The town of 26,000 and two nearby communities were virtually destroyed by last November's Camp Fire, which left 86 people dead.
Those proposed settlement amounts represent the company's bid in what will likely be a long, tough negotiation that would end with court approval.
"The thing is victims believe they're entitled to much more than PG&E wants to pay them," said Michael Wara, director of the Climate and Energy Policy Program at Stanford University. "Until that difference is worked out, it's hard to see a plan being approved by the court because that will require agreement by victims, their insurance companies, and the management of PG&E."
Mike Danko, a Peninsula lawyer who represents some of the victims of the last two years of fires, told the Sacramento Bee that PG&E's proposal was "woefully inadequate." Sacramento attorney Steve Campora, another lawyer for wildfire victims, called the plan "a joke."
“You’re sitting in your home, they burn you up ... and then try to cheat you on the other end,” Campora said.
PG&E shares traded as much as 10% higher Monday, rebounding after state lawmakers shelved a bill Friday that would have given PG&E the ability to issue billions of dollars in tax-exempt bonds to help pay victims of 2017 and 2018 wildfires caused by the utility's equipment.
That announcement sent PG&E shares plummeting to the lowest level since it announced it would seek bankruptcy protection in January. This weekend, the utility also rebuffed San Francisco's bid to pay $2.5 billion to buy PG&E's grid on its territory.
Any deal PG&E brokers with survivors and insurers would require approval from Judge Dennis Montali, who is overseeing PG&E's bankruptcy case, and the California Public Utilities Commission.
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