The California Public Utilities Commission (CPUC) on May 28 approved the Chapter 11 plan of reorganization of PG&E Corporation and its subsidiary Pacific Gas and Electric Company.
The CPUC approval in its plan of reorganization order instituting investigation proceeding completes another major milestone needed for PG&E to be eligible to participate in the State's Wildfire Fund and keeps the company on track for Bankruptcy Court confirmation of the plan prior to June 30, 2020, PG&E noted.
By adopting a final decision, the CPUC approved a number of measures to improve PG&E's governance process, operational structure, and safety performance. PG&E said that many of the measures outlined in the CPUC's final decision already are underway.
The decision also approves PG&E's request to issue new debt and securities to finance its exit from Chapter 11.
In addition to the CPUC's approval, on May 12, the Federal Energy Regulatory Commission issued its approval of the plan, including authorizing the creation and funding of PG&E's proposed Fire Victim Trust. Under PG&E's Plan, the Fire Victim Trust will be established to administer and pay wildfire victim claims as provided in the plan.
As part of the Chapter 11 process, PG&E previously reached settlements with all wildfire claimants' groups to be implemented pursuant to PG&E's plan, valued at approximately $25.5 billion, including:
- An approximately $13.5 billion settlement resolving claims by individual victims and others relating to the 2015 Butte Fire, the 2017 Northern California Wildfires (including the 2017 Tubbs Fire), and the 2018 Camp Fire; this includes stock valued at $6.75 billion based on an agreed-upon formula (the ultimate value of the stock could be higher or lower);
- A $1 billion settlement with certain cities, counties, and other public entities; and
- An $11 billion settlement with insurance companies and other entities that paid claims by individuals and businesses related to the wildfires.
Facing billions of dollars in wildfire-related liabilities, PG&E Corporation and Pacific Gas and Electric in January 2019 filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of California.
Municipalization efforts emerged in wake of PG&E shutoffs
In the wake of the utility’s implementation of power shutoffs aimed at preventing wildfires, California has seen a number of municipalization proposals emerge, as well as efforts to purchase PG&E assets.
Earlier this year, the City and County of San Francisco launched a new campaign highlighting San Francisco’s plans to acquire the local Pacific Gas and Electric power grid and shift to a cleaner, more reliable, locally controlled power system.
In a November 2019 letter to California Gov. Gavin Newsom, Jeff Shields, former General Manager of the South San Joaquin Irrigation District in California, outlined the reasons for why PG&E should be replaced with a public power entity.
Also last November, a group of over a dozen mayors of Northern California cities, including San Jose, proposed turning PG&E into a customer owned utility.
California bill calls for transforming PG&E into more customer-focused entity
Meanwhile, as PG&E Corp. moves closer to exiting bankruptcy, legislation is also moving forward that would lay the groundwork for an alternative path for Pacific Gas and Electric in case the bankruptcy plan failed.
Under the proposal, PG&E would be purchased by a new public benefits corporation, similar to an electric cooperative. It would not be a community-owned entity, but rather, a customer-owned entity.