Pacific Gas & Electric announced in early July that it emerged from its highly contentious bankruptcy. The nation’s largest utility initially filed bankruptcy to protect itself after its aging power grid ignited devastating wildfires in 2017 and 2018 that cost more than 100 people their lives. Another 80,000 Californians lost homes, businesses or suffered property damages. The utility paid $5.4 billion in funds and 22.19% of its stock into a trust for victims of the fires it caused.
Meets coverage of new wildfire fund
This move was the result of a $58 billion plan approved in June by a bankruptcy judge. Following through on it enabled the utility to qualify for a $21 billion wildfire insurance fund that California created in 2019. It also obligates the utility to pay $25.5 billion to wildfire victims.
This plan saddles the company with twice the debt it had in bankruptcy. This, critics fear, could hinder the utility’s ability to make an estimated $40 billion in updates to the grid that services 18 million customers.
What will be the impact?
This is actually the second time that PG&E filed an extremely complex bankruptcy. Electricity rates skyrocketed in 2004 after the previous bankruptcy, yet management did not use those profits to make repairs and upgrades to its grid, despite the need even back then.
Consumers, municipalities and insurance companies will watch the utility closely for quite some time. The interim CEO stepped down as planned at the end of the bankruptcy, with no replacement announced. So there are many variables at the company as the 2020 wildfire season gets underway.