Dive Brief:
- Bankrupt Pacific Gas & Electric is preparing to file a plan of reorganization with a federal bankruptcy court that will include $14 billion in equity commitments, Bloomberg reported Thursday, based on a draft term sheet the news outlet obtained.
- The utility has committed to filing its plan by the end of Monday. However, the filing will not include estimates of the utility's liabilities, which will be tallied by the U.S. District Court for the Northern District of California. Previously, PG&E said it could be on the hook for up to $30 billion related to California's deadly wildfires in 2017 and 2018.
- PG&E also told the district court it is working to improve its Enhanced Vegetation Management (EVM) program, aimed at reducing potential wildfires associated with overhead power lines. A previous assessment of the program charged the utility failed to address thousands of trees which pose a danger to the grid.
Dive Insight:
PG&E will soon file its highly-anticipated plan of reorganization, but it is still premature to know the full extent of the utility's liabilities. Those may be determined by Judge James Donato, who has scheduled an initial court date for Sept. 10.
Those estimates would be included in the plan once determined, and PG&E says it envisions exiting Chapter 11 in May 2020.
PG&E officials would not confirm details of Bloomberg's reporting, but told Utility Dive the company "has made significant progress in further refining a viable, fair, and comprehensive plan of reorganization."
Ultimately, they said, PG&E's plan will compensate wildfire victims and protect customer rates. The utility has said its plan will be rate-neutral for its 16 million customers.
The utility's creditors have developed their own visions for how to move forward, but so far PG&E remains in control of its fate. Last month, U.S. Bankruptcy Judge Dennis Montali rejected motions to terminate a period of exclusivity during which only PG&E can bring forward a plan. Montali also ruled that victims of the 2017 Tubbs fire will be allowed to sue PG&E — despite a determination by the California Department of Forestry and Fire Protection that the utility was not to blame for the deadly blaze.
Separately, PG&E told Judge William Alsup, also at the U.S. District Court for the Northern District of California, on Sept. 3 that it is working to improve its tree trimming practices, which were called out in a monitor's report. PG&E says it is making progress but the EVM program is "complicated by the fact that PG&E operates in a heavily forested and vegetated area," approximately half of which is designated as a high fire risk.
As of the end of August, PG&E said it had approximately 4,500 employees and contractors working on the program. Its own analysis of the effort reached findings similar to those of the critical monitor.
"Accordingly, PG&E had already begun implementing measures to address its own, internal findings prior to learning of the Monitor’s observations of the EVM program," the utility told the court. The utility said it has added "additional layers of control to confirm its contractors’ work," and is in the process of deploying a "quality assurance team" to audit completed work.
"Once these processes are fully in place, certain lines will be inspected at least three times to help facilitate a successful implementation of the EVM program," the utility said.
