On Friday, March, 20, PG&E announced it had reached a deal with California Governor Gavin Newsom and would emerge from its Chapter 11 case before the State’s June 30 deadline.
As part of the deal, PG&E agreed to not pay dividends to investors for the next three years, along with committing to use $7.6 billion of shareholder assets to repay or refinance the utility’s debt. These moves will result in $1.4 billion in savings to customers, meeting one of Newsom’s conditions that PG&E’s bankruptcy exit have a neutral financial impact on ratepayers.
PG&E also agreed to “a complete overhaul of its board selection process,” and will agree to a step-up enforcement process at the CPUC for any future violations, along with appointing a chief transition officer and allowing the State to select an operational observer for safety.
Most significantly, if the reorganized PG&E is “unable to succeed” after it emerges from Chapter 11 protection, the utility will be sold, according to Newsom’s office. That differs from Newsom’s previous threat to have the State take over the company.
Is the plan a done deal? No – the five CPUC commissioners must still vote on a decision, but they will likely vote in favor, now that Newsom is on board.
In addition to the idea of a group of mayors breaking up the company and turning it into a municipal entity, SB 917 seeks to create a structure by which the State could take over PG&E by eminent domain. Both of these options now seem highly unlikely.
While we are very early in the session, there are at least 20 bills that touch on wildfires and, specifically, Public Safety Power Shutoffs (PSPS), as well as the costs associated with both events. Both the Senate and the Assembly have expressed significant concern with the impacts of the PSPS and, through legislation, will seek to limit them to some degree.
There will likely be many other ideas in the coming month that we will monitor closely, and the impacts of the “next” potential wildfire will continue to be a top priority in this legislative session.
Read PG&E’s press release on its agreement with Governor Newsom.