SAN FRANCISCO (CN) – Facing a potential $30 billion or more in wildfire liability, Pacific Gas & Electric – California's largest investor-owned utility company – announced Monday that it will declare bankruptcy.
The announcement comes one day after the company's chief executive, Geisha Williams, stepped down amid mounting financial pressure and scrutiny arising from PG&E's possible role in a dozen or more wildfires over the past two years.
"We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion," PG&E's new interim CEO John Simon said in a statement Monday. "We expect this process also will enable PG&E to access the capital and resources we need to continue providing our customers with safe service and investing in our systems and infrastructure."
PG&E said it does not expect bankruptcy to affect its natural gas and electric service for 16 million California customers. Nevertheless, the announcement raises questions about whether hundreds of wildfire victims who have sued the company will ever see compensation.
This past June, the California Department of Forestry and Fire Protection concluded that 12 wildfires that blazed in October 2017 “were caused by electric power and distribution lines, conductors and the failure of power poles” owned by PG&E.
Last week, a federal judge overseeing PG&E's probation related to a 2010 gas line explosion ordered the company to begin re-inspecting its electrical grid and trimming or removing all trees near its power lines, among other fixes.
California Gov. Gavin Newsom said in a statement Monday that the company should continue to honor promises made to energy suppliers and its customers.
"Throughout the months ahead, I will be working with the Legislature and all stakeholders on a solution that ensures consumers have access to safe, affordable and reliable service, fire victims are treated fairly, and California can continue to make progress toward our climate goals," Newsom said.
State Sen. Bill Dodd of Napa, who championed a bill last year to partially shield PG&E from liability for wildfires caused by its equipment, voiced his disappointment with "PG&E's hubris and mismanagement" that "led to this unfortunate point."
Last week, Standard and Poors downgraded PG&E's credit rating to "junk status," citing a "souring of the political and regulatory environment."
Two lawyers representing victims of the 2018 Camp Fire in Butte County Superior Court, Steven Campora and Russell Reiner, could not immediately be reached for comment.
Robert Moest, a Santa Monica-based lawyer representing investors in a class action filed against PG&E in November, also did not immediately return a phone call seeking comment.
In the investor suit filed in November, lead plaintiff Ron Williams complained the $17 billion in estimated damages from the Camp Fire, which destroyed more than 12,000 buildings and killed 85 people, means claims “will likely exceed the company’s $1.4 billion insurance policy."
The cause of the Camp Fire is still under investigation, but homeowners in Butte County have reported problems with PG&E equipment in the area where the blaze started.
PG&E said in a statement Monday that it remains committed to assisting the communities affected by the Northern California wildfires, and that its restoration and rebuilding efforts will continue.Follow @NicholasIovino
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