Dive Brief:
- Pacific Gas & Electric has raised its offer to compensate wildfire victims to $13.5 billion, according to Bloomberg News, after California Gov. Gavin Newsom, D, asked a bankruptcy court to block approval of a smaller settlement and noted the possibility that the state "will need to pursue its own plan."
- It is the second time Newsom has raised the idea of a state-led takeover of PG&E, which filed for bankruptcy in January facing billions in wildfire liabilities. The utility is also under growing scrutiny related to Public Safety Power Shutoffs (PSPS) it says are necessary to the reduce risk of sparking more fires.
- There is increasing interest in transitioning PG&E from an investor-owned utility to a public entity. Last week more than a dozen California mayors asked the state's Public Utilities Commission (CPUC) to consider the idea, arguing that the utility must be "reimagined" in order to serve the public. The utility has previously said it is not for sale.
Dive Insight:
PG&E will need to make significant changes to exit bankruptcy and has proposed a reorganization plan, but there is momentum building for a wholesale shift of the utility's purpose.
"We face the need for a completely re-engineered and reconstructed system to adapt to the realities of climate change and poorly maintained infrastructure," 22 mayors wrote to the CPUC and Newsom, urging consideration of a public takeover. "PG&E cannot meet these challenges if it stumbles out of bankruptcy, barely able to raise capital, and suffering prohibitive costs."
The effort is being led by San Jose Mayor Sam Liccardo, who first raised the idea in October. Newsom previously hinted at a similar idea, saying "all options are on the table" in an effort to accelerate PG&E's bankruptcy proceeding.
Over the weekend, Newsom asked a U.S. bankruptcy court to delay approval of PG&E's $11 billion insurance settlement with groups representing subrogation claims related to the 2017 Northern California wildfires and 2018 Camp Fire. And Newsom called the utility's filing "yet another example of legal maneuvering by parties apparently more focused on securing procedural advantages for their own pecuniary interests than on reaching a fair and expeditious resolution of this bankruptcy."
The $13.5 billion PG&E is now proposing would equal the funds that a rival bankruptcy reorganization proposal has included, according to The Wall Street Journal.
PG&E is up against a June 30 statutory deadline to advance a reorganization plan or lose access to a fund designed to help utilities address wildfire costs.
The CPUC on Wednesday will consider opening an investigation into how investor-owned utilities are utilizing the PSPS program to keep electric systems safe. PG&E's shutoffs have left millions without power, when the utility determined high winds and dry conditions created conditions where its system could potentially spark a fire.
The agenda for the meeting says the purpose of this investigation would be to consider if IOUs' "actions to de-energize their electric facilities during hazardous weather conditions properly balance the need to provide reliable service with public safety."
The utility's official creditors committee had no comment. PG&E in a statement said it remains committed to "working with the individual claimants to fairly and reasonably resolve their claims and will continue to work to do so."
