SAN FRANCISCO (CN) – Accusing besieged utility Pacific Gas and Electric of dragging its feet in resolving its bankruptcy, a group of bondholders proposed a $30 billion restructuring plan Tuesday that will fully compensate wildfire victims and give certain groups the right to select PG&E board members.
“Progress towards a viable, confirmable plan is long overdue," the Ad Hoc Committee of Senior Unsecured Noteholders, or those who loaned PG&E money not secured by the company's assets, wrote in a 47-page motion filed with the bankruptcy court Tuesday morning.
The unsecured noteholders claim PG&E has "done little to nothing" to resolve wildfire claims, with the exception of a $1 billion deal reached last week with local governments affected by fires in 2015, 2017 and 2018.
The noteholders say they learned of that deal through the press and that PG&E has refused to include them and other stakeholders in important discussions about settling wildfire claims. They cite that as evidence of PG&E's "failure to build consensus for a path going forward."
"The Ad Hoc Committee cannot sit idly by and wait for [PG&E] and their new board of directors to start the process while the possibility of substantial wildfire in the near future looms," the noteholders wrote.
In a statement, PG&E denied it has shut out stakeholders from important discussions and moved at a "sluggish pace" to resolve its bankruptcy case and compensate wildfire victims.
“PG&E is committed to working together with our stakeholders through the Chapter 11 process to fairly and expeditiously resolve our liabilities resulting from the 2017 and 2018 Northern California wildfires, develop a more sustainable business model, and continue delivering safe and reliable service," PG&E spokesman James Noonan said by email. "We can assure our customers and communities that we are looking at all options when it comes to working with the governor and all stakeholders."
The noteholders propose $30 billion in new investment capital for PG&E, with $16 to $18 billion going to compensate wildfire victims and $4 billion earmarked for any potential future wildfire claims.
The proposed $16 billion fund for past fire victims includes $12.27 billion for non-Tubbs Fire claims, $1.5 billion for the 2017 Tubbs Fire, $1.15 billion in attorneys' fees for fire victims, $1 billion for local governments and $25 million for the Oakland Ghost Ship warehouse fire.
Noteholders say the new money would also pay for safety improvements, including hardening power lines and electrical equipment in wildfire-prone areas, and keep PG&E on track to meet California's renewable energy standards.
The plan would fully compensate pre-bankruptcy wildfire victims and pay unsecured noteholders no less than 98 percent of the money owed to them.
The ad-hoc committee says it is willing to fund the reorganized company under the conditions they propose. The noteholders say the plan will not result in an increase in customers' utility rates, an accomplishment they point out aligns with the demands of California Governor Gavin Newsom.
The plan also calls for giving three groups the right to select three members on PG&E's 11-member board of directors. PG&E customers, employees and wildfire victims would get to select one board member each. The plan would also bar PG&E's CEO from serving as chairman of the board.
Last week, Bloomberg reported that PG&E was planning to propose its own $31 billion restructuring plan in August which would include $14 billion for past wildfire victims. The company also reportedly planned to push for a $20 billion trust for future wildfire claims, funded by $14 billion in state water bonds, $3 billion in PG&E contributions and $3 billion from other utilities.
California Governor Gavin Newsom has unveiled plans for a $10.5 billion wildfire cost recovery fund that could climb as high as $21 billion, partially funded by a proposed $2.50 surcharge on utility bills.
In its proposal Tuesday, the committee of unsecured noteholders asked U.S. Bankruptcy Judge Dennis Montali to end the period in which PG&E can exclusively propose its own restructuring plan so that the court can consider and approve the noteholders' plan.
In May, Montali extended the exclusivity period to Sept. 28.
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