PG&E told the California Public Utilities Commission (CPUC) that its plan to exit bankruptcy and pay victims of fires its power lines caused would cost $57.65 billion. The exit plan would be funded partly by PG&E raising more than $44 billion in new financing. Since state law requires PG&E to resolve its bankruptcy without raising rates, most of the financing, about $28.5 billion, would come through new debt held at the company and subsidiary. The debt and equity raise could be a historic effort of
its own.

During the March 2-4 CPUC Evidentiary Hearings in PG&E’s Bankruptcy Proceeding, PG&E’s Chief Financial Officer, Jason Wells, told the CPUC that, “This … will be the largest capital raise in the utility industry, and one of the largest in corporate history.”

The bankruptcy exit plan would, if finalized, fund more than $25 billion in settlements related to fires blamed on PG&E, including the 2017 Wine Country wildfires and the 2018 Camp Fire. One of the settlements would establish a $13.5 billion trust to pay individual fire victims. The fund, established with PG&E stock, would be cashed out over time, something that has troubled fire victims. PG&E officials told CPUC that the plan – specific to the trust fund – would provide the market with some stability as to when and how those shares will be disposed, and would help support a better stock value and, therefore, a higher recovery for victims.

In order to qualify for the AB 1054 multibillion-dollar fund to protect itself from future fire costs, PG&E needs to get its bankruptcy judge and the CPUC to approve its exit plan by June 30. The company has made a lot of progress toward meeting that deadline, and completing the recent evidentiary hearings was part of that progress.

Is the plan a done deal? No; the five CPUC commissioners must still vote on a decision, and it’s not totally clear as to how any of them will vote.

As the evidentiary hearings began, CPUC President Marybel Batjer offered the following:

“I appreciate the tremendous amount of time and effort the parties have put into the proceedings so far and believe it underscores the monumental importance of the issue that is before us.”

As CPUC considers the PG&E bankruptcy plan, it is also considering a proposal from Batjer that could establish an escalating enforcement process, should the company continue to endanger the public when the case concludes. The most severe consequences would involve CPUC seeking to put someone else in control of the company or revoke its operating license. PG&E and other groups are expected to weigh in on that proposal by the end of March.

Beyond the actions of the CPUC and the court, there is, of course, the unpredictability of what the legislature may also conjure in the balance of the current legislative session.