PG&E is proposing to cap the wildfire liabilities that forced it into bankruptcy at about $18 billion — less than half of what victims and insurers have said they’re owed.
The power company laid out the cap as part of a reorganization plan filed Monday that would have it exiting the biggest utility bankruptcy in U.S. history by next year. As proposed, the parent of Pacific Gas & Electric Co. would raise a combination of debt and equity to cover the liabilities it’s facing after its equipment was blamed for igniting blazes that killed more than 100 people and destroyed tens of thousands of structures in 2017 and 2018.
Complicating PG&E’s plan is the fact that claims tied to the blazes are getting tallied as part of a separate court process that’s only just begun. Any exit plan hinges on that estimate. The official tally could lead to an entire rewrite of PG&E’s reorganization. A total that’s higher than PG&E is capable of paying threatens to wipe out current shareholders because, under the U.S. Bankruptcy Code, fire victims would get paid in full first.
The proposal “will almost certainly face opposition,” Bloomberg Intelligence analyst Negisa Balluku said in a note Monday, ahead of the filing made in federal court in San Francisco. PG&E has until June to get out of bankruptcy if it wants to participate in a statewide fund recently established to help utilities cover the cost of future fires.
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