PG&E Expects to Boost Spending While in Bankruptcy Proceedings
(Bloomberg) -- PG&E Corp. will seek to boost capital expenditures while in bankruptcy proceedings, spending about $6.6 billion this year and $6.9 billion in 2020.
The numbers were included in a slide show to prospective lenders for loan syndication, after California’s largest utility owner this week lined up $5.5 billion in credit facilities for its impending Chapter 11 bankruptcy filing.
The company, which has said it expects to file for bankruptcy on or after Jan. 29, estimates 2018 spending will amount to $6.5 billion, part of a “robust” capital expenditure plan to bolster safety initiatives, according to a filing with the U.S. Securities and Exchange Commission Wednesday.
Investigators are probing whether PG&E’s equipment ignited the Camp Fire, the deadliest and most destructive in California history, which killed 86 people. Lawmakers including newly installed Governor Gavin Newsom have made it clear they have little appetite to intervene with a bailout for the company, at least not until it actually has gone bankrupt.
PG&E shares are down more than 80 percent since the Camp fire broke out in November, and its debt rating has been cut to junk status.
The company had previously stated that it expected to spend $6.4 billion in 2019. It will need approval from state regulators for its plan to spend between $5.7 billion and $7 billion annually from 2020 to 2023, according to the slides. The slide show states that PG&E, which serves 16 million customers, has $61.2 billion in book value. Among its liabilities:
- The California Department of Insurance lists an aggregate amount of about $17 billion worth of insurance claims made as of Dec. 12 for the Camp Fire and as of Sept. 6, 2018 for the 2017 Northern California wildfires. “PG&E expects that additional claims have been submitted and will continue to be submitted to insurers, particularly with respect to the Camp Fire,” the company said.
- PG&E has about $840 million in insurance coverage for liabilities, including wildfire events, for the year stretching after Aug. 1, 2017. The company renewed its liability insurance coverage for wildfires in the amount of about $1.4 billion in the third quarter, for a period stretching from Aug. 1, 2018 to July 31, 2019.
- PG&E said it has 4,100 individual plaintiffs from the Butte fire, currently in court; it has 3,800 plaintiffs for 2017 fires in Northern California and 2,100 plaintiffs for the 2018 fires.
- The company said it expects those cases to be subject to an automatic stay under Chapter 11, and it will continue to seek to change the state’s inverse condemnation law in bankruptcy.
©2019 Bloomberg L.P.