California's PG&E Power Utility Files For Bankruptcy After Wildfire Lawsuits

Jan 29, 2019
Originally published on January 29, 2019 2:48 pm
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California's Pacific Gas and Electric, one of the nation's largest utilities, filed for Chapter 11 bankruptcy protection today. PG&E says that's the only way it can handle billions of dollars in potential liabilities from back-to-back years of wildfires. California officials are still investigating PG&E's role in November's Camp Fire. That was one of the most destructive wildfires in state history. It killed 86 people and incinerated communities in and around the Northern California town of Paradise. From Paradise, NPR's Eric Westervelt reports.

ERIC WESTERVELT, BYLINE: PG&E argues it has no choice but to file for Chapter 11 given the flood of lawsuits and their stock reduced to junk status. In a statement today, the utility said bankruptcy will facilitate an orderly, fair and expeditious resolution of the liabilities that continue to arise from recent wildfires. UC Berkeley law professor Ken Ayotte is an expert on corporate bankruptcy.

KEN AYOTTE: Chapter 11 is really the best way to deal comprehensively with all the liabilities they have.

WESTERVELT: Ayotte says a key impetus for the filing - in California, utilities can be held liable for wildfire damages if the company sparked the blaze regardless of whether they were negligent. PG&E got a rare bit of good news last week when the state's fire agency said in a report that it doesn't think the company's equipment started a massive 2017 blaze in wine country known as the Tubbs Fire, which killed 22 people. But that report isn't the final word, and the company still faces scores of lawsuits from 2017 and 2018, including the historic Camp Fire. Ayotte says the utility has to show Wall Street investors it's working to put a cap on potential fire damages.

AYOTTE: It's going to continue to hang over their heads until they address it. So I think Chapter 11 makes a lot of sense here.

WESTERVELT: But to many fire victims and their many lawyers, it doesn't make sense.

MIKE DANKO: When PG&E says, oh, safety is our most important priority, no, it's not. Their only priority is profits.

WESTERVELT: Attorney Mike Danko represents a large group of wildfire victims suing PG&E. He sees bankruptcy as a PG&E ploy to get around paying for what he calls the company's long history of negligence and safety violations, a history that Danko believes shows PG&E is too big and too poorly managed to survive bankruptcy as is.

DANKO: Why do we have a for-profit company running a utility? You have to ask whether that model even works.

WESTERVELT: And Danko's clients are asking whether they'll get the compensation they're seeking at the end of a complex process that could take up to two years. Law professor Ayotte says given the pecking order of Chapter 11, survivors have reason to worry.

AYOTTE: The bankruptcy process says everyone gets paid fairly in accordance with their priority. But if you're an unsecured creditor, like a fire damage victim, it may mean that what comes out of the bankruptcy process may not be 100 cents on the dollar in terms of full recovery.

WESTERVELT: State Senator Bill Dodd, whose district includes many 2017 wildfire victims, says that new uncertainty re-victimizes survivors. It would then likely fall to the state legislature, and, by extension, taxpayers, to make fire victims whole.

Today, the utility's acting CEO, John Simon, pledged yet again to improve the company's safety culture. He called it our most important responsibility. I'm standing here outside the company's sprawling staging center near Paradise where a small army of PG&E trucks is heading out to continue to try to restore services to Paradise and surrounding towns, towns that now are mostly eerily empty that remain filled with debris, ash, burned out cars and fallen trees, towns where people may want a measure of justice and compensation more than new power lines to nowhere. Eric Westervelt, NPR News, Paradise, Calif.

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