California’s Largest Utility Plans Bankruptcy As CEO Makes For The Exit

PG&E chief executive leaving as utility readies for possible bankruptcy

The nation's largest utility said Monday it is filing for Chapter 11 bankruptcy because it faces at least $30 billion in potential damages from lawsuits over the catastrophic wildfires in California in 2017 and 2018 that killed scores of people and destroyed thousands of homes.

Veteran New York bankruptcy lawyer H. Jeffrey Schwartz said Chapter 11 will allow the company to operate without being burdened by its liabilities.

Simon said that a court-supervised bankruptcy "will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion". "PG&E remains committed to assisting the communities affected by wildfires in Northern California, and its restoration and rebuilding efforts will continue".

Its bonds maturing in March 2034 are trading at 81.314, down from 87.989 on Friday.

The San Francisco-based company said it will file under Chapter 11 of the USA bankruptcy code by January 29 after giving the required 15-day notice to its employees, according to a filing at the Securities and Exchange Commission on Monday.

On Sunday, PG&E provided a 15-day advance notice for filing for Chapter 11 bankruptcy.

The company is facing billions of dollars in claims related to November's Camp fire, which destroyed almost 19,000 structures and killed at least 86 people, as well as several infernos in 2017.

It said it will continue working with regulators and stakeholders to consider how it can safely provide energy "in an environment that continues to be challenged by climate change".

The announcement came less than a day after the utility announced that CEO Geisha Williams was stepping down, to be replaced by general counsel John Simon on an interim basis. Within the massive burn area, PG&E found power equipment and a fallen power pole riddled with bullet holes, according to a letter it sent to regulators.

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The company said it is facing nearly 50 lawsuits related to last November's Camp Fire in Paradise, along with hundreds of lawsuits from fires in Northern and Southern California in 2017.

The Company does not expect any impact to electric or natural gas service for its customers as a result of the Chapter 11 process.

The California Department of Forestry and Fire Protection is still investigating the fire's cause, but PG&E says it experienced issues at part of its electrical system near where the fire broke out.

The daughter of Cuban political refugees, Williams became the nation's first Latina CEO of a Fortune 500 company when she took over PG&E. Cal Fire says the Camp Fire began November 8 at 6:33 a.m. local time on Pulga Road in Butte County - and PG&E sent an official notice to the California Public Utilities Commission describing an outage on one of its transmission lines at Pulga Road at 6:15 a.m.

PG&E Share Price fell sharply on Monday.

"California's existing liabilities laws weren't made for the new normal that we face going forward with these climate driven wildfires", Steve Malnight, a senior vice president at PG&E, told NPR member station KQED in August. Currently, PG&E serves around 15 million people in the state of California.

It is believed the fire was started when a PG&E power line came in contact with nearby trees.

The state legislature cleared the way for PG&E to securitize debts related to deadly wildfires in 2017, but that does not include the costs of last year's blazes.

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