PG&E Votes To File For Chapter 11 Bankruptcy
SAN FRANCISCO (CBS SF) -- The Pacific Gas and Electric board of directors voted Monday evening to file for Chapter 11 bankruptcy protection.
PG&E said it would officially file at midnight Tuesday.
The filing will enable the company to freeze its debts and continue operations, while it develops a financial reorganization plan.
California State Senator Bill Dodd, whose district includes areas in Napa and Sonoma counties that were heavily damaged in the Oct. 2017 wildfires, issued a statement after PG&E officials confirmed that they would file for bankruptcy.
"Given its track record of obfuscation and mismanagement, I'm not surprised PG&E claims it can no longer meet its financial obligations," the statement read. "It's extremely disappointing and underscores the need for change at PG&E in both its leadership and culture. Wildfire victims shouldn't have to deal with the uncertainty this causes, which in many respects re-victimizes them."
An advocacy group called The Utility Reform Network (TURN) worries that rate payers will be forced to foot part of the bill.
"The message to customers is really bad here. It's that, we're more concerned with our shareholders than we are with our customers," said TURN's Mindy Sprat. "We don't care how high your bills go. We are going to do our best to make them higher. And we are going try and get out of the accountability that the federal court is proposing."
Spratt says she suspects the timing of the bankruptcy filing is linked to a federal court hearing scheduled for Wednesday about whether PG&E has violated the terms of its probation from earlier safety lapses.
Earlier Monday, at a noisy meeting punctuated by protests, the California Public Utilities Commission in San Francisco voted to allow PG&E Co. to borrow up to $10 billion to pay for operations during its expected bankruptcy.
PG&E has said it plans to file its bankruptcy protection petition in U.S. Bankruptcy Court to enable it to continue operating while resolving a potential liability of up to $30 billion for Northern California wildfires.
The Chapter 11 process enables a company to freeze its debts and continue functioning while developing a financial reorganization plan.
PG&E had asked the CPUC for approval to obtain $6 billion in bank loans during that process. The decision authored by Commission Chairman Michael Picker allows the utility to borrow up to $10 billion without further authorization.
Picker told the meeting audience, "Nothing in this decision allows PG&E to increase rates. It merely authorizes PG&E to borrow money to continue operations."
The measure was unanimously approved by the four current commission members at an emergency meeting announced Monday morning.
About two dozen speakers lined up during a public comment period to urge converting the shareholder-owned utility into a publicly-owned utility and to object to the last-minute scheduling of the meeting.
"Why do we need a private company working as a public utility? If we're going to bail someone out, why don't we bail out the fire victims?" one speaker asked.
Another told the commission, "When you want a public process, you don't give notice of it at the last minute."
Some members of the audience chanted slogans such as "Wall Street bailout, we say 'no'" during some of the public comments and during Picker's remarks.
One speaker read the names of the 86 people killed in the Nov. 8 Butte County Camp Fire as audience members chanted each name in response. Cal Fire has not yet determined the cause of that fire.
San Francisco-based PG&E provides electricity and natural gas to 16 million customers in Northern and Central California.
If allowed to keep operating during the Chapter 11 bankruptcy, it would become what is known as a debtor in possession.
PG&E said in a statement, "The debtor-in-possession financing provides the funds needed to continue operating our business and to continue investing in our systems, infrastructure and wildfire mitigation initiatives throughout the Chapter 11 process.
"That process also supports the orderly, fair and expeditious resolution of its liabilities resulting from the 2017 and 2018 wildfires," PG&E said.
PG&E spokeswoman Andrea Menniti confirmed Monday evening, "We expect to file petitions to reorganize under Chapter 11 on or about January 29."
Both PG&E Co. and its parent holding company, PG&E Corp., are expected to file.