PG&E Declares Bankruptcy And CEO Resigns

15 January, 2019, 05:57 | Author: Kevin Carter
  • Geisha Williams speaks during the 2018 CERAWeek by IHS Markit conference in Houston Texas on Thursday

US utility Pacific Gas and Electric Company (PG&E) disclosed on Monday that it will file for bankruptcy. State investigators found PG&E; lines were responsible for igniting 18 wildfires in October 2017, and are still probing whether the utility's equipment caused the devastating Camp Fire past year.

PG&E faces at least $30 billion in liabilities from damage during the 2017 and 2018 wildfire seasons.

The reorganization will involve investments by PG&E's to make is distribution systems safer as the company looks for alternative ways to provide "safe delivery of natural gas and electric service".

Late Sunday, PG&E Corp. said that CEO Geisha Williams resigned, and that John Simon will serve as interim chief executive. But the CPUC has also launched a review of PG&E's overall "corporate governance, structure and operations", based on its failure to address the safety problems that led to the utility's deadly San Bruno pipeline explosion in 2010, and potential role in sparking the deadly wildfires of the past two years.

Jacob Kilstein, an analyst at Argus Research, said he was stunned by Monday's announcement and had expected PG&E to push for state bailout money before playing the bankruptcy option. The utility went through a reorganization from 2001 to 2004, which resulted in a settlement that was estimated to cost the average customer anywhere from $1,300 to $1,700, according to the Los Angeles Times. The utility faces dozens of lawsuits from people who lost loved ones and property in the fires, and under a legal standard known as "inverse condemnation", utilities in California are held liable for damages caused by fires started by their equipment, even if they are found to be safely and legally operating that equipment.

"The people affected by the devastating Northern California wildfires are our customers, our neighbors and our friends, and we understand the profound impact the fires have had on our communities and the need for PG&E to continue enhancing our wildfire mitigation efforts", John R. Simon, PG&E interim CEO said.

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A shortwave infrared (SWIR) satelite image of the Camp Fire in Magalia, Paradise, California, November 9, 2018.

Kilstein said he was surprised to see PG&E announce plans to declare bankruptcy. Already, investigators have concluded that the firm's equipment caused a minimum of 17 major wildfires in 2017. "The Company also expects that its employees will continue to receive their pay and healthcare benefits as usual". He added that the bankruptcy "will enable PG&E to access the capital and resources we need to continue providing our customers with safe service".

The utility set up barricades at its headquarters in San Francisco before additional details were set to be revealed at a news conference.

As for what may happen with rates for gas and electricity, PG&E spokesperson Lynsey Paulo says that the upcoming bankruptcy is "a long process that we're just announcing today and I can't speculate on what changes, if any, could result".

Pacific Gas and Electric said last month it determined weather conditions were no longer unsafe enough to warrant a massive power shut off on November 8 - a decision that came as a massive fire was tearing through a Northern California town.

Last week, a federal judge said in a court order that the utility may be ordered to inspect its electric grid and turn off power during windy conditions to prevent wildfires this year.

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