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Update: PG&E Fire Victims Worry & Inverse Condemnation

Posted By Administration, Tuesday, December 3, 2019

California’s wildfire victim total continues to rise.

To date over 70,000 Californians have filed claims against Pacific Gas and Electric (PG&E). Recent fires will add to that total and some attorneys think as many as 100,000 people may be eligible to get payments from PG&E for damages they have suffered because of fires caused by the company’s equipment.

Many — especially those with inadequate, or no insurance — will have to wait until PG&E comes out of its bankruptcy before they can get a payout. So surviving — for some — has become an impossible task.

Bankruptcy attorney Hugh Ray of the law firm McKool Smith says adding to the worries of survivors is the growing number of people in California that will need a piece of PG&E’s rapidly shrinking pie. “The more victims there are, the smaller the slices of the pie. That’s just the way it’s going to be,” he said.

PG&E’s bankruptcy plan says it will give $8.4 billion to wildfire victims. Under the plan another $11 billion will go insurers. That totals $19.4 billion. The bondholders are much more stingy and would give wildfire victims $13.5 billion under their plan.

Ray said the competing plans make it uncertain as to the amount of money that will eventually be available for victims. That uncertainty is compounded by the growing numbers.

“They’re not going to get anything like a complete recovery,” Ray said. “It won’t be anything like enough to solve all the problems. At this point I don’t see the money.”

Meanwhile, U.S. Bankruptcy Judge Dennis Montali has said no to the latest push by Pacific Gas & Electric to change California’s inverse condemnation law. That law means PG&E is responsible for losses from fires caused by malfunctioning equipment.

In case you’re not familiar, inverse condemnation means the company is responsible even if it did a good job of maintaining the equipment and it causes a fire — or fires — anyway.

Montali said PG&E can recoup those losses by raising rates. California law allows that.

Part of the problem PG&E faces — critics say — is that poor maintenance or out-and-out negligence to its power grid led to these fires. Those fires killed people and destroyed property. Rates cannot be raised high enough to compensate so PG&E and other utilities have to go to the investors to survive.

Investors are demanding higher interest rates for the money borrowed.

A double-whammy comes because PG&E — and other utilities — cannot afford to borrow. They have to — then — continue to ignore their infrastructure. PG&E says that means it cannot maintain the system and that puts over 5-million people in danger. They law — it says — needs changed.

“PG&E continues to believe that imposing strict liability without regard to fault under inverse condemnation is a flawed legal doctrine and bad for our customers, our economy and our state,” the company said in a statement about the judge’s ruling.

 

Source links: Associated Press, The Press Democrat

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