Published: Tue, January 15, 2019
Money | By Bruce West

PG&E Plans To File For Bankruptcy Over Possible Liability In California Wildfires

PG&E Plans To File For Bankruptcy Over Possible Liability In California Wildfires

PG&E lost half its value on Monday after the troubled California utility, which faces huge liabilities over the state's deadly wildfires, said it would file for bankruptcy protection. The company could face murder charges if found responsible for starting the Camp Fire, and it is already facing numerous lawsuits. PG&E's liability for the Camp Fire and other wildfires could total $30 billion.

On Sunday night the company reported that CEO Geisha Williams, who had been in the job less than 11 months, has stepped down. But safety is an issue that has dogged the beleaguered utility for months.

Veteran New York bankruptcy lawyer H. Jeffrey Schwartz said Chapter 11 will allow the company to operate without being burdened by its liabilities. The utility went through a reorganization from 2001 to 2004, which resulted in a settlement that was estimated to cost the average customer anywhere from $1,300 to $1,700, according to the Los Angeles Times.

The company's deepening financial crisis has forced California regulators and policy makers to consider a bailout package and PG&E.

The 150-year-old company said: "We recognise that the devastating and unprecedented Northern California wildfires of 2017 and 2018 have had a profound impact on our customers and their communities". In 2017, she became the first Latina CEO of a Fortune 500 company. "The Company also expects that its employees will continue to receive their pay and healthcare benefits as usual".

The cause of the worst 2017 wildfire - the Tubbs Fire, which killed 24 people and leveled neighborhoods in and around Santa Rosa - is still under investigation.

PG&E said in a securities filing it could potentially raise more money and avoid seeking bankruptcy protection, but argued such a move would be complex, uncertain and expensive.

The utility said the bankruptcy process would not affect electric or natural gas services for customers.

Assure the Company has access to the capital and resources necessary to support ongoing operations and enable PG&E to continue investing in its systems, infrastructure and critical safety efforts, including investing in its Community Wildfire Safety Program, an additional precautionary safety measure implemented following the 2017 Northern California wildfires to further reduce wildfire risk.

"Following a comprehensive review with the assistance of our outside advisors, the PG&E Board and management team have determined that initiating a Chapter 11 reorganization for both the Utility and PG&E Corporation represents the only viable option to address the Company's responsibilities to its stakeholders", said Richard C. Kelly, chair of the board of directors at PG&E.

PG&E's liabilities from that fire could be catastrophic if authorities determine its equipment caused the blazes. "Everyone's immediate focus is, rightfully, on ensuring Californians have continuous, reliable and safe electric and gas service".

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