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PG&E — Bankruptcy & a New Board

Posted By Staff reporter, Tuesday, April 2, 2019

As you know Pacific Gas & Electric — AKA PG&E — declared bankruptcy in January. The company has been blamed for billions in losses and the loss of lives from a series of wildfires that devastated California.

 

In order to continue to operate while in Chapter 11 reorganization the company has asked Judge Dennis Montali of the San Francisco’s U.S. Bankruptcy Court for permission to borrow $5.5 billion. It will maintain electricity and natural gas delivery to consumers while the company reorganizes.

 

The judge granted the request.

 

And while the company looks for cash, it is also trying to reorganize internally starting with a redo of the board of directors. The announced plan is to add hedge fund financiers and — Governor Gavin Newsom says — people with little or no experience in the operation of a utility and the safety involved in that operation.

 

He is pushing PG&E to go a different direction. “With this move, PG&E would send a clear message that it is prioritizing quick profits for Wall Street over public safety and reliable and affordable energy service,” Newsom wrote in a letter to PG&E’s interim CEO John Simon.

 

That letter was made public.

 

It came when one of the major shareholders — BlueMountain Capital Management — criticized the bankruptcy decision and put out its own slate of new board members. There are 13 of them.

 

“PG&E needs a board with proven experience in safety, claims resolution, utility operations, finance and turnarounds, and California business and public policy,” BlueMountain Capital said in its statement.

 

PG&E shared the names of the candidates for the board with the governor but neither the company nor the governor made those names public. Spokeswoman Lynsey Paulo said PG&E understands the governor’s concern.

 

“We recognize the importance of adding perspectives to the Board that will bring about the right changes in safety, as well as help address the serious operational and financial challenges the business faces now and in the future,” she said.

 

In his letter Newsom said PG&E must have a board remake that reflects the need and that need is experts in regulation, safety and clean energy. This group does not fill that bill.

 

“Any new board member should be resolved to change the culture of the company, understand the concerns of ratepayers and demonstrate a commitment to the fair treatment of wildfire victims and employees,” Newsom wrote.

 

Advocates like the Utility Reform Network — a consumer advocacy group — are happy with the governor’s stance. Network executive director Mark Toney said, “It was a very good thing for the governor to serve notice that replacing the board with the same kind of Wall Street interests that have put profits in front of safety for so many years is not going to solve the problem.”

 

Source links: Reuters, WTOP

Tags:  declared bankruptcy in January  Pacific Gas & Electric  PG&E  wildfires that devastated California 

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California Wildfires, PG&E Bankruptcy & Insurance

Posted By Staff reporter, Tuesday, February 5, 2019

As you know, Pacific Gas & Electric is being blamed for many of the wildfires in California that have killed dozens of people and destroyed massive amounts of property. Since 2017 close to 1,000 lawsuits have been filed against the company.

More suits are likely.

To date the company has been blamed for 17 major fires and the cost to PG&E — if found guilty — is around $30 billion. No cause has yet been determined for the Camp Fire that burned down most of Paradise, California and killed 86 people. However, most experts say it’s likely PG&E caused.

That said, PG&E was recently found to not be the cause of the fire in Napa’s wine country that killed 22 people and destroyed over 5,000 homes and businesses. Good news for PG&E. Not such good news for those who lost so much.

That conclusion by CalFire will — no doubt — be attacked in court.

Adding to the complexity of the lawsuits and lawsuits to come is PG&E’s filing for bankruptcy. However, PG&E’s interim CEO John Simon said the company isn’t trying to ditch its responsibility. Bankruptcy will let the company make an orderly, fair and expeditious resolution of wildfire claims.

“Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires,” he said.

Among those seeking restitution from PG&E are insurers who’ve shelled out dollars to make victims of those fires whole. One of the companies suing the company is State Farm. Its suit said PG&E failed to “keep the power lines, wires, and any and all associated equipment in a safe condition at all times to prevent fires.”

 California Insurance Commissioner Ricardo Lara said to date insurers have received $14.8 billion in claims for the Camp Fire and other fires in California in November of last year. That — he says — is a massive financial exposure. However, he is confident insurers can handle the claims but isn’t sure if those losses can be passed on to PG&E.

“The outcome is still undecided on who is responsible for that fire, but we know insurers have the money they need to make the claims whole,” Lara said. “Regardless of who’s at fault, we are confident insurers have the money.”

 

 

Another concern Lara has is the ability of people in fire-prone areas to purchase insurance, or keep the insurance they purchase. He said insurers must — if they choose not to insure — tell the insured that there are other options like the state’s insurer of last resort, the FAIR plan.

“We want to make sure that we’re monitoring the situation, and right now we don’t feel this is an area we should be alarmed about,” Lara added.

While some worry, the American Property Casualty Insurance Association (APCI) is not. Its members write 60% of the P&C insurance written in the U.S. Spokeswoman Nicole Mahrt-Ganley said, “California still has a competitive market, there are other carriers moving into place to write new business.”

A.M. Best said insurers are definitely going to take a hit and will have substantial losses because of the PG&E bankruptcy. Some specialty insurers will take the biggest hit but Best said, “the losses will be within their risk appetites, and we do not expect any ratings impact.”

 

Source links: Press Democrat, Insurance Business America, Carrier Management

Tags:  CEO John Simon  Pacific Gas & Electric  PG&E  wildfires in California 

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