Pacific Gas & Electric and California Gov. Gavin Newsom have reached a deal for the nation’s largest utility to emerge from bankruptcy triggered by massive liabilities from wildfires
SACRAMENTO, Calif. —
Pacific Gas & Electric and California Gov. Gavin Newsom announced a deal Friday that removes the last hurdle for the nation’s largest utility to emerge from bankruptcy triggered by massive liabilities from wildfires.
PG&E agreed to overhaul its board and operations and to a process that would put the company up for sale — essentially allowing the state to take over — if it doesn’t get out of bankruptcy by June 30.
PG&E filed in bankruptcy court Friday that it will agree to increased regulatory oversight and commit billions of dollars in additional spending to prevent wildfires, meeting a critical demand by the governor.
“This is the end of business as usual for PG&E,” Newsom said in a statement. “Through California’s unprecedented intervention in the bankruptcy, we secured a totally transformed board and leadership structure for the company, real accountability tools to ensure safety and reliability and billions more in contributions from shareholders to ensure safety upgrades are achieved.”
Newsom has unusual leverage over PG&E because the company needs state approval of its bankruptcy plan to qualify for coverage from a wildfire insurance fund that California created last summer.
With Newsom’s support, the company anticipates state regulators’ approval “so that we can exit Chapter 11, pay wildfire victims fairly and as soon as possible, and participate in the state’s Wildfire Fund,” CEO Bill Johnson said in a statement.
The utility’s outdated system triggered a series of catastrophic wildfires in 2017 and 2018 that killed so many people and burned so many homes and businesses that the company had to file for bankruptcy early last year.