SAN FRANCISCO (CN) – A day after the California Public Utilities Commission cleared the way for Pacific Gas & Electric to secure $6 billion in debt financing for its operations – amid a chorus of boos and opposition – the nation’s largest utility filed for bankruptcy protection Tuesday in a bid to relieve itself of the potential billions in liability it could face from devastating wildfires.
At a hastily called emergency meeting Monday, the commission approved the utility giant's request for regulatory exemptions that will let it to boost its short-term borrowing from $4 billion to $6 billion.
"The exemption granted is narrow and only grants PG&E exemptions for the purpose of obtaining debtor financing," commission chair Michael Picker said, adding that PG&E shall not be allowed to pass on its borrowing costs to ratepayers.
Several attendees criticized the commission for calling the meeting with only a few hours notice, accusing the regulator of skirting public meeting laws so it could push through a "bailout" for the company.
"It's quite clear that this emergency was declared so you could give the public less notice," San Francisco resident Magick Altman said during her allotted one minute of speaking time at the meeting.
Dozens of citizens lined up to denounce PG&E's request, calling it a "bailout" and arguing that wildfire victims should be compensated before "Wall Street banks." One critic read aloud the names of 88 people who died in the recent Camp Fire. The cause of that fire is still under investigation, but problems with PG&E equipment were reported in the area where the blaze started.
Several speakers on Monday also argued that the state should take control of PG&E's gas and electric operations in California.
Commissioner Martha Guzman Aceves suggested that proponents of a state-run utility corporation present their ideas to the Legislature.
Guzman Aceves said the measure approved Monday was designed to enable a "continuation of the lights being on and the continuation of the [PG&E] workforce being able to continue."
Tuesday's bankruptcy will allow PG&E to continue operating while it gets its financial house in order. The company faces hundreds of lawsuits from victims of wildfires in 2017 and 2018, though the Chapter 11 filing puts a halt to all of them and consolidates them in bankruptcy court. Legal experts say victims will likely see a much smaller payout as a result, having to compete with the rest of PG&E's creditors.
California Gov. Gavin Newsom vowed to see that "victims and employees are treated fairly."
Also on Monday, the California Department of Forestry and Fire Protection (Cal Fire) filed a brief in PG&E's criminal case on charges relating to the fatal 2010 San Bruno gas line explosion. According to that brief, a Cal Fire investigation found the three major causes of wildfires involving PG&E equipment over the last eight years were trees and limbs hitting power lines, equipment malfunctions and conductor failures. Other causes included animals nesting on wires and cars hitting utility poles.
On Wednesday, PG&E lawyers will appear before a federal judge in San Francisco to oppose a set of proposed wildfire-prevention probation terms, which the company said could cost it up to $150 billion.
The California Public Utilities Commission also filed a brief in PG&E's criminal case Monday, opposing the proposed probation conditions that would require PG&E to always de-energize its power systems in areas during high-wind events. The commission said that requirement could hinder communications during emergencies and hamper firefighting capabilities. The regulator said it could take three days or more to re-energize systems because physical inspections are required before they can be restarted.
In a statement Monday, PG&E said it remains focused on supporting Camp Fire victims through the recovery and rebuilding process, adding that the commission's decision Monday will allow it to secure more funding to carry on with those efforts.
"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," PG&E spokeswoman Andrea Menniti said in an emailed statement.
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