Lawmakers seek to protect fire victims in PG&E bankruptcy
Democratic state Sens. Bill Dodd of Napa and Mike McGuire of Healdsburg, who both represent areas scorched by the North Bay wildfires of 2017, said fire survivors and PG&E ratepayers need protection as the state’s largest utility moves toward a bankruptcy filing in two weeks.
But neither lawmaker nor newly sworn-in Gov. Gavin Newsom cited any specific responses Tuesday as the process for assigning an estimated $30 billion in wildfire liabilities and settling 3,600 survivors’ damage claims appears headed out of state courts and into federal bankruptcy court.
PG&E said Monday that seeking bankruptcy protection was “the only viable option” and has until Jan. 29 to submit an official filing.
“I’m not sure there’s a legislative role here yet,” said Dodd, who last year co-chaired a special legislative committee that crafted a wide-ranging wildfire response bill.
The measure allowed PG&E to lean on its customers to help pay for billions of dollars in damages from the 2017 blazes. But the law did not apply to 2018, when the Camp fire killed at least 86 people, destroyed more than 14,000 homes and accounted for $12.5 billion in insured losses, the costliest disaster in the world that year.
There had been talk of extending the same provision to cover 2018, but Dodd said it now is “not likely to happen.” He also ruled out the prospect of using taxpayer funds to assist PG&E in any way.
The North Bay wildfires destroyed more than 6,200 homes and caused $10 billion in insurance claims.
McGuire said it was “to soon to tell” if the state might provide funding to the embattled utility, which also declared bankruptcy in 2001, facing a $9 billion debt and soaring wholesale power costs.
Now, 18 years later, the next move is up to PG&E, McGuire said.
“I am looking for PG&E to present a plan to dig out of this financial swamp,” he said. “The bottom line is they have to.”
However, McGuire said, Newsom and lawmakers are “working overtime” to develop safeguards for “survivors who lost everything in the North Bay and Camp fires.”
Newsom told reporters Monday he had brought in experts on bankruptcy and finance for assistance, calling the bankruptcy “a top priority” for his administration. But like the lawmakers, he offered no details.
“All the options are on the table,” Newsom said.
“I think we just need to be patient with the process,” Dodd said. “Right now there are parties talking behind the scenes on this.”
Dodd said PG&E needs to make “wholesale changes” to its 10-member corporate board of directors, which includes at least five members who have remained since the San Bruno gas pipeline explosion in 2010.
“I think it’s inexcusable,” he said.
One of the long-standing board members, Roger Kimmel, vice chairman of the investment banking firm Rothschild Inc, resigned Monday, PG&E disclosed Tuesday.
PG&E spokeswoman Lynsey Paulo said Tuesday the utility giant is committed to working with regulators and lawmakers.
Paulo was asked but did not comment on whether PG&E would follow up on former CEO Geisha Williams’ plan to renew a request to ease California’s legal standard that holds utilities liable for any damage caused by their equipment, regardless of whether the company was deemed negligent.
“That’s not happening,” said Michael Wara, a lawyer and Stanford University expert on energy policy, who said the effort would be a “waste of time and resources” by PG&E lobbyists.
Moreover, he said, easing the doctrine, known as inverse condemnation, likely wouldn’t benefit the utility in terms of the Camp fire “because it looks like PG&E was negligent.”
No official determination has yet been made on the cause of the Camp fire.
State fire investigators have concluded that PG&E equipment sparked at least 17 of 21 major wildfires that killed 44 people and destroyed 8,900 structures in 2017. A report on the most devastating blaze that year, the Tubbs fire in Sonoma and Napa counties, is still pending.
Wara said bankruptcy will inevitably erode compensation to fire victims by at least 20 percent and possibly much more. The process could also take years, during which there may be additional wildfires, he said.
Ultimately, PG&E’s major problem may be an inability to borrow money at reasonable rates because investors consider the utility too great a risk, Wara said. “Right now the rate is infinity. No one will lend them money,” he said.
PG&E or its successor will need to borrow heavily to make system safety improvements, such as burying power lines and installing steel poles, Wara said.