BY Fraser Tennant
The devastation wrought by wildfires in California is pushing energy company Pacific Gas and Electric (PG&E) Corporation to file for Chapter 11 bankruptcy as it faces liabilities estimated at $30bn.
In 2017 and 2018, fires destroyed vast areas of Northern California and claimed the lives of 44 and 86 people respectively.
During the Chapter 11 process, PG&E expects to resolve its liabilities resulting from the 2017 and 2018 wildfires and will assure access to the capital and resources needed to continue to provide a safe service to its customers.
Furthermore, the company has stated that it does not expect any impact to its customers’ electric or natural gas service and remains committed to assisting the communities affected by the wildfires.
Earlier this week, Geisha Williams, PG&E's chief executive since March 2017, resigned.
"The people affected by the devastating wildfires are our customers, our neighbours 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,” said John R. Simon, interim chief executive at PG&E Corporation. “We remain committed to helping them through the recovery and rebuilding process. We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion.”
PG&E has engaged in discussions with potential lenders with respect to debtor-in-possession (DIP) financing and expects to have approximately $5.5bn of committed DIP financing by the time it files for relief under Chapter 11 on or about 29 January 2019. The DIP financing will provide PG&E with sufficient liquidity to fund its ongoing operations, including its ability to provide a safe service to its customers.
Richard C. Kelly, chair of the board of directors of PG&E Corporation, concluded: “Our goal will be to work collaboratively to fairly balance the interests of our many constituents – including wildfire victims, customers, employees, creditors, shareholders, the financial community and business partners – while creating a sustainable foundation for the delivery of safe service to our customers in the years ahead.”