PG&E files for bankruptcy as wildfires liability looms

Pacific Gas & Electric Corporation and its operational subsidiary PG&E Company, the company accused of starting several of California’s record-breaking wildfires in 2017 and 2018, has filed for Chapter 11 bankruptcy protection.

The energy supplier was recently cleared of causing the Tubbs Fire by the California Department of Forestry and Fire Protection (Cal Fire), which is responsible for determining the origin and cause and of wildfires.

However, investigations are ongoing into the cause of the Camp Wildfire, which destroyed almost 19,000 structures, resulting in 86 deaths and insured losses of as much as $10 billion.

PG&E, which filed for bankruptcy once before in 2001, has warned it could face “significant liability” in excess of its insurance coverage if its equipment was found to have caused the Camp Fire.

In conjunction with the filings, it also filed a motion seeking interim and final approval of the court to enter into an agreement for $5.5 billion in debtor-in-possession (DIP) financing with a number of banks. If approved, these funds would provide PG&E with necessary capital to effectively continue to operate during the Chapter 11 cases.

As part of the filings, PG&E also filed various motions with the Court in support of its reorganization, including requesting authorization to continue paying employee wages and providing healthcare and other benefits. In the filings, PG&E also asked for authority to continue existing customer programs, including low income support, energy efficiency and other programs supporting customer adoption of clean energy.

John Simon, the interim CEO of PG&E Corporation, said: “Our most important responsibility is and must be safety, and that remains our focus. Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires.

“We also intend to work together with our customers, employees and other stakeholders to create a more sustainable foundation for the delivery of safe, reliable and affordable service in the years ahead. To be clear, we have heard the calls for change and we are determined to take action throughout this process to build the energy system our customers want and deserve."

He added: "Through this process, we will prioritize what matters most to our customers and the communities we serve – safety and reliability. We believe that this process will make sure that we have sufficient liquidity to serve our customers and support our operations and obligations," Simon said.

"I know that our 24,000 dedicated employees remain steadfastly focused on delivering safe and reliable natural gas and electric service for the 16 million people across our service area. Each day I see the hard work and resilience of our team, and I thank them for their continued dedication to working safely and delivering for our customers."

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