San Francisco
The Chapter 11 filing allows PG&E to continue operating while it puts its books in order. But it was seen as a glimpse of the financial toll that could lie ahead for the industry because of climate change, which scientists say is leading to fiercer, more destructive blazes and longer fire seasons.
The bankruptcy also could jeopardize California’s ambitious program to switch entirely to renewable energy sources within a few decades.
PG&E, which supplies natural gas and electricity to 16 million people in Northern and central California, cited hundreds of lawsuits over fires in 2017 and 2018 and tens of billions of dollars in potential liability when it announced earlier this month that it planned to file for bankruptcy.
The blazes include the nation’s deadliest wildfire in a century — the one in November that killed at least 86 people and destroyed 15,000 homes in and around the Northern California town of Paradise.
The cause still is under investigation, but suspicion fell on PG&E after it reported power line problems nearby around the time the fire broke out.
Last week, however, state investigators determined that the company’s equipment was not to blame for a 2017 fire that killed 22 people and destroyed more than 5,600 buildings in Northern California wine country.
That finding spared PG&E from billions in liability.
PG&E said the bankruptcy will not affect electric or gas service and will allow for 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,” interim CEO John R. Simon said in a statement.
The wildfire lawsuits accuse PG&E of inadequate maintenance, including not adequately trimming trees and clearing brush around electrical lines, and failing to shut off power when fire risk is high.
The bankruptcy filing immediately puts the lawsuits on hold and consolidates them in bankruptcy court, where legal experts say victims will probably receive less money.
“They’re going to have to take some sort of haircut on their claims,” said Jared Ellias, a bankruptcy attorney who teaches at the University of California, Hastings College of the Law. “We don’t know yet what that will be.”
In a bankruptcy proceeding, the victims will have little chance of getting punitive damages, and their claims almost certainly will be heard by a judge, not a jury. They also will have to stand in line behind PG&E’s secured creditors, such as banks, when the judge decides who gets paid and how much.
Jeffrey Hammond said he is pessimistic that he will collect any money from the company now that it has filed for bankruptcy.
His home in Napa County was destroyed in 2017 in a fire that investigators say started when an oak tree fell onto a PG&E power line.
He said the house could have been sold for $500,000, but his insurance company paid only $100,000 — the most recent county assessment. He sued PG&E hoping to “close the gap.”
“I’m 76, going to be 77 soon,” he said. “And this will take years to sort out.”
Gov. Gavin Newsom said in a statement that his administration will work to ensure that “Californians have access to safe, reliable and affordable service, that victims and employees are treated fairly, and that California continues to make forward progress on our climate change goals.”