California Governor Forms ‘Strike Team’ to Advise on PG&E
(Bloomberg) -- A California’s team of advisers on PG&E Corp.’s bankruptcy has been given 60 days to map out a plan to ensure the lights stay on, wildfire victims get justice and ratepayers and employees are protected.
The Golden State has hired bankruptcy attorneys and financial specialists to help strategize, Governor Gavin Newsom said during his state of the state address Tuesday in Sacramento. Meanwhile, in bankruptcy court, the U.S. Trustee appointed the official committee to act on behalf of all unsecured creditors, including labor representatives and power providers.
“We are all frustrated and we’re angry that it’s come to this,” Newsom said. “PG&E didn’t do enough to secure dangerous equipment or plan for the future. My administration will work to make sure PG&E upholds its obligations.”
PG&E’s bankruptcy puts in question the future of power and gas service to millions of people -- about 40 percent of the most populous U.S. state. California’s biggest utility filed for Chapter 11 bankruptcy protection last month, saying it faced an estimated $30 billion or more in liabilities from wildfires in 2017 and 2018.
The state’s other investor-owned utilities -- Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric -- have been downgraded amid concerns about their exposure to potential fire claims.
At issue is a unique California legal doctrine, under which utilities can be found strictly liable for damages from wildfires that have been sparked by their equipment, even if they weren’t negligent. Utility operators can ask regulators for permission to recover those costs from customers although the process can be lengthy and uncertain.
Newsom noted that “the problems we face are far greater than PG&E” and cited both a changing climate and the Edison and SDG&E downgrades. “We must map out a longer-term framework not just for the utilities’ future, but for California’s energy future, to ensure that the cost of climate change doesn’t fall on those least able to afford it.”
In addition, the U.S. Trustee announced on Monday that it would form a committee to represent people suing PG&E, said Mike Danko, who represents one group of wildfire victims.
PG&E rose 7.7 percent to close at $15.43 Tuesday in New York. Edison gained 2.8 percent.
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