A U.S. Bankruptcy Judge has started the clock, giving California officials until August 7 to sort out the wave of proposals to seize control of Pacific Gas & Electric and pull the utility out of a bankruptcy. PG&E first filed for bankruptcy in January in response to the $30 billion in liabilities the utility was set to owe victims of wildfires the company’s equipment may have ignited in 2017 and 2018.
While PG&E has until Sept. 26 to submit its own debt payoff and financial reconstruction plan, multiple parties, including insurance companies and a group of PG&E bondholders, are developing proposals of their own.
In the meantime, the utility is operating under the status quo for the time being. In fact, last week operators of the 550 MW Topaz Solar facility in San Luis Obispo County, California announced that they had received full contract payment for its June 2019 energy deliveries to PG&E.
Furthermore, the utility has continued to operate its Self Generation Incentive Program, paying owners of energy storage systems out of accounts specifically created for the program and funded by ratepayers.
The reason for the seemingly-rushed decision to have the third-party proposals accounted for and reviewed so quickly is to settle the bankruptcy case as quickly as possible, with the ultimate target of June 2020. The reason for that specific target is because June is when participation begins for a $21 billion wildfire insurance fund.
PG&E has already requested some $5.5 billion in debtor-in-possession financing, and that number is just to maintain operations during the Chapter 11 process. In terms of future ownership, the current proposal making waves is the one initiated by the aforementioned group of insurance companies. These companies are owed more than $20 billion.
The insurance companies plan to turn these unaddressed claims into new stock. This new pool of stock would then give the companies a sizeable share of the PG&E’s stock holdings, allowing for the creation of a trust for wildfire victims.
The most interesting proposition thus far has come from the city of San Francisco. The city is looking into purchasing the power lines previously owned by PG&E in the pursuit of creating a municipal utility. Under the San Francisco proposal, the city would buy up the distribution system assets in addition to generation assets. The city claims that doing so will ensure supplies remain affordable, reliable and in compliance with climate goals.
The saga of PG&E is the energy world’s best ongoing melodrama, one that has the potential to entirely rewrite the definition of public power as we know it.
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