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USA

California Governor Rejects PG&E’s Restructuring Plan

Gov. Gavin Newsom of California said on Friday that Pacific Gas & Electric’s restructuring plan did not comply with a state law, throwing up a new hurdle to the company’s effort to resolve its bankruptcy.

The move was not surprising given that Mr. Newsom, a Democrat, has criticized PG&E for starting devastating wildfires, not moving fast enough to resolve the claims of fire victims and not moving fast enough to improve its safety practices.

A law the California Legislature passed this year gave Mr. Newsom the authority to approve any restructuring plan PG&E submits to the United States Bankruptcy Court. Mr. Newsom’s letter indicates that the company will have to engage in further negotiations with the governor before it can end its bankruptcy and participate in a state wildfire fund.

“In my judgment, the Amended Plan and the restructuring transactions do not result in a reorganized company positioned to provide safe, reliable, and affordable service to its customers,” Mr. Newsom told PG&E in the letter.

“PG&E’s board of directors and management have a responsibility to immediately develop a feasible plan,” Mr. Newsom said. “Anything else is irresponsible, a breach of fiduciary duties, and a clear violation of the public trust.”

On Thursday, PG&E filed an amended reorganization plan with the federal Bankruptcy Court, after reaching a $13.5 billion settlement with wildfire victims. The utility needed to reach that deal to escape bankruptcy by a state imposed deadline of June 2020 in order to participate in the wildfire fund.

“We believe our Plan is the best solution for all constituencies, and we look forward to bringing these complex proceedings to their conclusion,” Bill Johnson, president and chief executive of PG&E Corporation, said in a statement. “In the meantime, we continue to make meaningful changes and additional investments throughout the company to reduce the risk of wildfire and help us continue to deliver safe, reliable energy to our customers.”

PG&E filed for bankruptcy in January after amassing tens of billions of dollars in liability because of fires caused by its equipment. The fires included the 2018 Camp Fire, which killed 85 people and destroyed the town of Paradise.

To prevent more devastating wildfires, the utility intentionally cut power to millions of customers this fall. The move angered Californians and had prompted Mr. Newsom to demand that the company make far-reaching changes.

Mr. Newsom’s letter did not reject the utility’s settlement with wildfire victims but rather raised concerns with the overall plan. The governor said PG&E’s plan did not go far enough in improving safety, corporate governance and the company’s financial position.

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