California Utility PG & E On Road To Nowhere After Burning Down The House
California's biggest investor-owned utility, Pacific Gas and Electric, is fixing to file for Chapter 11 bankruptcy after starting a whole bunch of the wildfires that plagued the state in 2017 and 2018, the company announced yesterday. PG&E announced it's seeking bankruptcy to protect itself from more than $30 billion in lawsuits filed over the fires, which killed scores of people as well as burning down thousands of homes and businesses. The fires also caused disastrous erosion of Donald Trump's already-failing brain.
The actual bankruptcy filing won't happen until near the end of the month, but PG&E filed notice of its plans Monday with the Securities and Exchange Commission. A new California law requires the company to give employees 15 days advance notice of any Chapter 11 filing. And no, those fires weren't caused by inadequate forest raking:
Fire investigators determined PG&E to be the cause of at least 17 of 21 major Northern California fires in 2017. It is also suspected in some of the 2018 wildfires that have been described as the worst in state history, including one that killed at least 86 people and destroyed the town of Paradise.
PG&E said it faced an estimated $30 billion liability for damages from the two years of wildfires, a sum that would exceed its insurance and assets.
The AP notes the bankruptcy filing
will not make the lawsuits disappear, but it will result in all of the wildfire claims being consolidated into a single proceeding before a bankruptcy judge, not a jury. That could shield the company from runaway jury verdicts, and also buy time by putting a hold on the claims.
In addition to Monday's Chapter 11 filing, PG&E chief executive Geisha Williams resigned Sunday so she wouldn't have to face reporters asking her how it felt to run a company accused of killing people, or even what her Cuban parents were thinking when they named her "Geisha," for crap's sake. (Seriously, what were they thinking?) Williams was the first Latina CEO of a Fortune 500 company, and now she's the first Latina CEO of a Fortune 500 company to resign in disgrace. The company didn't disclose her exit package, but based on annual reports, the San Francisco Chronicle reports she could be eligible for
compensation [ranging] from $3.1 million to $7.4 million to more than $10 million depending on whether she was terminated for cause, resigned or retired, or was terminated without cause. The latter two figures include more than $3 million from the value of stock awards and are based on a much higher stock price than where PG&E Corp. currently trades.
Any payout based on stock value right now is going to be well below those estimates, since the New York Timespoints out PG&E shares have taken a dive into the toilet like a desperate homeowner whose house is engulfed in flame:
The bankruptcy announcement, in a filing with federal regulators, led the company's shares to plunge more than 50 percent.
The shares had already lost almost two-thirds of their value since a wave of wildfires in early November, and its bond rating had been downgraded to junk status by two rating agencies.
But don't panic: PG&E wants to reassure its 16 million customers in central and northern Cali they shouldn't have to worry about the bankruptcy causing any interruption in gas or electric service, even as they continue worrying the utility's power lines and substations might spark another killer wildfire.
This will be PG&E's second bankruptcy in recent years -- the company filed for Chapter 11 in 2001 when energy supplies were short and prices were high. The cost of the bankruptcy will largely be borne by shareholders, not customers, since state regulators set utility rates, not the bankruptcy court. PG&E and other commercial utilities have also lobbied successfully to get some protections from the costs of wildfires from the state legislature, which allowed them to pass on some liability costs of the 2017 fires to ratepayers. California law requires utilities to pay for the costs of property losses in fires sparked by power lines or other equipment, even if there's no proof of negligence. But the utilities argue they shouldn't be held solely responsible for fires made far more destructive by climate change, either, and isn't that a fine mess, as the Timesnotes:
Indeed, energy experts said PG&E's intention to file for bankruptcy was one of the first major financial casualties from climate change — and far from the last [...]
"Today PG&E is confronting this risk from wildfires," said Michael Wara, director of the Climate and Energy Policy Program at the Woods Institute for the Environment at Stanford University. "Tomorrow it could be insurance companies or state governments that are overwhelmed after an unexpectedly intense hurricane or series of hurricanes."
Gee, remember when the National Climate Assessment forecast huge economic costs of climate change? It's almost as if those scientists weren't just pulling numbers out of their asses like a common US "president."
PG&E isn't exactly famous for its caution when it comes to protecting lives and property, either, as the Times reminds us:
The company's safety culture has been under scrutiny since it was found at fault in a natural-gas explosion in 2010 that devastated the San Francisco suburb of San Bruno and killed eight people. PG&E was fined a record $1.6 billion by the state for failing to maintain its pipeline system properly, and it paid $900 million to resolve lawsuits related to the explosion.
California Gov. Gavin Newsom said PG&E "has not been a trusted player in the past," since it misled regulators following that disaster and others. The California Public Utilities Commission is likely to keep a very close watch on the bankruptcy plan, which it will have to approve. The commission has a vacancy for Newsom to fill, and he has the option to make his appointee the commission's president. Hey, maybe pick someone who won't just roll over and give PG&E anything it wants?
Then there's this:
The bankruptcy will allow PG&E to renegotiate its contracts with its electricity suppliers, which could hurt solar and wind farms that might struggle to make money and repay debts if they are forced to accept lower prices.
Which sucks, but it's also worth noting that last year, California committed to a plan to get 100 percent of its electric power from clean sources, so in the long term, solar, wind, and other green energy will happen. And, we hope, more locally run public utilities will be providing power, huh? Or the editrix had a simpler idea, and the last word:
@adlerben @cmarinucci @GavinNewsom @PGE4Me Just take their shit, Gavin. Just grab it. If they can't power Californi… https://t.co/RhjfjTQxIs— Rebecca Schoenkopf, Wonkette Editrix, King Of You (@Rebecca Schoenkopf, Wonkette Editrix, King Of You) 1547512675.0
[SFGate/AP / San Francisco Chronicle / NYT]
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