PG&E Agrees to More State Control If It Gets Into Trouble Again
(Bloomberg) -- PG&E Corp. said it’s open to a proposal that would let California regulators take greater control of the company if it gets into trouble again, largely conceding to one of Governor Gavin Newsom’s demands for the utility to exit bankruptcy.
PG&E said it agrees with the establishment of a six-step enforcement process proposed by California Public Utilities Commission President Marybel Batjer. The process, which could ultimately lead to the state revoking the company’s operating license, would be triggered by specific events, including operational and safety breaches, according to a filing Friday.
Newsom said in December he wanted PG&E’s restructuring plan to include an option for a state takeover if the utility gets into trouble again. He’s also called for the replacement of PG&E’s board of directors. Batjer’s recommendations include having at least half of the new board members be from California.
PG&E pushed back against the idea of full board overhaul, saying in its filing that it would not be “appropriate.”
PG&E said it expects a “substantial number” of directors will be new when it exits Chapter 11. The company’s filing Friday was in response to a number of proposed amendments by Batjer to its reorganization plan.
PG&E’s responses come as it is seeking approval from both state regulators and a bankruptcy court for its turnaround plan by June 30 to qualify for a state fund established to provide financial assistance for future fire-damage claims. The California utility filed for Chapter 11 bankruptcy protection more than a year ago with an estimated $30 billion in liabilities from wildfires blamed on its equipment.
PG&E shares fell 13% before before the start of regular trading Monday as the market fell globally over ongoing concerns about the coronavirus.
On Friday, PG&E it was on track to exit bankruptcy by the state deadline, having reached $25.5 billion in settlements with fire victims, insurers and government agencies over fire damages.
“We welcome the CPUC’s input regarding our plan for emerging from Chapter 11 and building a re-imagined PG&E,” the company said in a statement.
Newsom had said that PG&E’s reorganization plan fell short of state requirements. He’s also called for the company to come up with a better financing plan.
The governor said in court papers last week that PG&E has addressed some of his concerns, and his office continues to hold talks with the utility.
PG&E said in its filing Friday that it believes its reorganization proposal complies with state requirements, and said it will continue talks with the governor’s office.
The escalating enforcement steps proposed by Batjer include appointing a third-party monitor, chief restructuring officer, a receiver or potentially revoking the company’s operating license.
PG&E proposed Friday that the five-member commission -- and not its executive director -- should decide if PG&E requires a third-party monitor or greater oversight. The utility said it also wants to have a year to correct any safety or compliance issues before the commission decides if it needs to take the step of appointing a chief restructuring officer.
Meanwhile, a bankruptcy judge is expected to approve PG&E’s bankruptcy disclosure statement this week that will allow the company to begin soliciting votes for its turnaround proposal.
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