The settlement was supposed to resolve more than $36 billion in claims from those victims. It came after PG&E struck a separate $11 billion deal with insurers who already paid out billions in losses to their policyholders for the same fires.
Those two settlements form the foundation of a plan now in jeopardy of crumbling unless PG&E can placate Newsom. The Democratic governor's approval is needed for the utility to be able to draw on a special fund lawmakers approved last summer to protect California utilities from future wildfire losses as climate change makes them more frequent and destructive.
The company's bankruptcy plan must be approved by the state and a federal judge by June 30 to qualify for the wildfire fund.
Newsom “has all the leverage now, and he is obviously using it,” said Christopher Muir, an investment analyst with CFRA Research.
PG&E has until Tuesday to submit a revised arrangement to Newsom. In a statement, the company said it believes its plan complies with California laws and pledged to work diligently to resolve any misgivings.
U.S. Bankruptcy Judge Dennis Montali is scheduled to rule on PG&E's plan by Friday.
No matter what happens next, many of the utility's 16 million customers are fed up. The backlash primarily stems from wildfires that killed nearly 130 people and destroyed about 28,000 structures, and the company's decision this fall to turn off power to millions of customers to reduce fire risks during extremely windy and dry conditions.
A group of protesters vented their frustration in demonstrations Monday outside PG&E's San Francisco headquarters.
In his strongly worded letter to PG&E on Friday, Newsom didn't spell out all the specific changes he wanted, but left no doubt that he expects the company to replace all 14 members of its board of directors.
That demand comes despite PG&E having ushered in 12 new board members in the past nine months. Newsom wants the company's board to have more directors from California with more experience running a safe business, something the governor and other critics say PG&E hasn't been doing in the past decade.