PG&E Corporation and Pacific Gas and Electric Company (together, “PG&E”) today filed an amended Plan of Reorganization with the Bankruptcy Court in its Chapter 11 cases. The Plan reflects PG&E’s settlements with all major groups of wildfire claimants and keeps PG&E on track to achieve regulatory approval and Bankruptcy Court confirmation in advance of the June 30, 2020, statutory deadline for participation in the state’s new wildfire fund.
The company believes its Plan is confirmable, satisfies all requirements of Assembly Bill 1054 (AB 1054) and complies with the Bankruptcy Code. It is the product of extensive negotiations, treats all victims fairly, protects customers and employees, and will enable PG&E to emerge from Chapter 11 as a financially sound utility positioned to serve California for the long term.
“Today’s filing brings us one step closer to successfully concluding PG&E’s Chapter 11 cases so that the wildfire victims can be compensated as quickly as possible. We appreciate the extensive work by many stakeholders that went into this Plan, in particular the efforts of our state leaders to encourage all parties to work quickly to find common ground,” said CEO and President of PG&E Corporation Bill Johnson.
“We believe our Plan is the best solution for all constituencies, and we look forward to bringing these complex proceedings to their conclusion. 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,” Johnson said.
The company is committed to working with all stakeholders to confirm support for the Plan, to obtaining regulatory approval from the California Public Utilities Commission consistent with AB 1054, and to achieving confirmation of the Plan by the Bankruptcy Court in advance of June 30, 2020.
PG&E’s Plan: Best Path Forward
PG&E’s Plan prioritizes getting wildfire victims paid soonest by resolving outstanding litigation and eliminating the need for a Tubbs Fire trial and a costly and uncertain estimation process. PG&E assumes its obligations to its employees and creditors without impairments, making sure all parties are treated fairly.
The plan put forward by the Ad Hoc Bondholders group (the Elliott plan) is a last-ditch effort to derail the wildfire victims’ settlements, and force costly, uncertain and protracted litigation. That plan would enrich those firms backing it by charging interest rates on debt that are both above market rate and higher than required by law, rather than putting those ratepayer dollars toward safety, reliability and clean energy investments.
Major Settlements Reached
As announced last week, PG&E reached a settlement valued at approximately $13.5 billion to resolve all remaining wildfire claims, including individual claims, relating to the 2015 Butte Fire, 2016 Ghost Ship Fire, 2017 Northern California Wildfires (including the 2017 Tubbs Fire), and the 2018 Camp Fire pursuant to the terms of PG&E’s Plan. PG&E’s Plan has the support of the Official Committee of Tort Claimants and firms representing approximately 70% of wildfire victims.
PG&E previously reached settlements with two major groups of wildfire claim holders, including a $1 billion settlement with cities, counties, and other public entities, and an $11 billion agreement with insurance companies and other entities that have already paid insurance coverage for claims relating to the 2017 and 2018 wildfires.
Today, PG&E also resolved the disputed release provisions between the wildfire victims and insurance companies, which was a condition to the settlement with the wildfire victims.
Overview of PG&E’s Plan
PG&E’s Plan would accomplish the following:
- Satisfy the requirements of AB 1054 and put PG&E on a path to help the state meet its clean energy goals and become the company that customers and communities expect and deserve;
- Compensate wildfire victims and certain limited public entities from a trust funded for their benefit in the amount of approximately $13.5 billion in accordance with the terms of the Tort Claimants Restructuring Support Agreement, which is subject to the approval of the Bankruptcy Court and other conditions;
- Compensate insurance subrogation claimants from a trust funded for their benefit in the amount of $11 billion in accordance with the terms of the Subrogation Claims Settlement and Restructuring Support Agreement, which is subject to the approval of the Bankruptcy Court and other conditions;
- Pay $1 billion in full settlement of the claims of certain public entities like cities and counties relating to the wildfires, as previously announced;
- Pay in full, with interest at the legal rate, all prepetition funded debt obligations, all prepetition trade claims and all prepetition employee-related claims;
- Assume all power purchase agreements and community choice aggregation servicing agreements;
- Assume all pension obligations, other employee obligations, and collective bargaining agreements with labor; and
- Provide for PG&E’s future participation in the state wildfire fund established by Assembly Bill 1054.
PG&E’s Plan is fully financeable throughout the capital structure. This includes the over $12 billion of equity backstop commitments that the company received last week to support its Plan.
PG&E’s Plan is subject to confirmation by the Bankruptcy Court in accordance with the provisions of the Bankruptcy Code.
The Plan filed today is available on the company’s website at http://investor.pgecorp.com/Chapter-11/default.aspx.
Key PG&E Safety Improvements and Investments
PG&E has taken and continues to take critical actions to improve safety and strengthen its operations, including:
- Completing enhanced and accelerated inspections of more than 700,000 transmission, distribution and substation assets of its electric infrastructure in high fire-threat areas and addressing immediate safety risks;
- Conducting enhanced vegetation management, including meeting and exceeding important state standards regarding clearances around power lines in high fire-threat areas;
- Conducting system hardening and resiliency, including replacing wood poles with more resilient poles, replacing bare overhead conductor with covered conductor, targeted undergrounding, and establishing temporary microgrids;
- Upgrading its Wildfire Safety Operations Center, which serves as PG&E’s 24/7 hub for monitoring wildfire risks and coordinating prevention and response efforts across Northern and Central California;
- Installing more than 600 weather stations and 130 high-definition cameras across its service area. PG&E will continue to expand these networks in high fire-threat areas to enhance weather forecasting and modeling and improve the company’s ability to predict and respond to extreme wildfire danger;
- Naming Bill Johnson as Chief Executive Officer and President of PG&E Corporation;
- Naming Andrew M. Vesey as Chief Executive Officer and President of Pacific Gas and Electric Company, with responsibility for all aspects of Utility operations;
- Appointing new leaders in Electric Operations and Gas Operations;
- Establishing a $105 million Wildfire Assistance Fund to aid those displaced by the 2017 Northern California wildfires and 2018 Camp Fire who are either uninsured or need assistance with the cost of substitute or temporary housing or other urgent needs; and
- Continuing to invest in PG&E’s systems, infrastructure and critical safety efforts while delivering safe natural gas and electric service to its millions of customers.
Public Dissemination of Certain Information
PG&E Corporation and Pacific Gas and Electric Company (the “Utility”) routinely provide links to the Utility’s principal regulatory proceedings with the California Public Utilities Commission and the Federal Energy Regulatory Commission at http://investor.pgecorp.com, under the “Regulatory Filings” tab, so that such filings are available to investors upon filing with the relevant agency. PG&E Corporation and the Utility also routinely post, or provide direct links to, presentations, documents, and other information that may be of interest to investors at http://investor.pgecorp.com, under the “Chapter 11,” “Wildfire Updates” and “News & Events: Events & Presentations” tabs, respectively, in order to publicly disseminate such information. It is possible that any of these filings or information included therein could be deemed to be material information.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. Each of PG&E Corporation and the Utility is a separate entity, with distinct creditors and claimants, and is subject to separate laws, rules and regulations. For more information, visit http://www.pgecorp.com.
This press release contains forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E Corporation and the Utility, including but not limited to their bankruptcy emergence plan and related financings. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties, including the possibility that the conditions to emergence in the Plan or to funding under equity financing commitments will not be satisfied. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in PG&E Corporation and the Utility’s joint Annual Report on Form 10-K for the year ended December 31, 2018, their joint Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019, and their subsequent reports filed with the Securities and Exchange Commission. Additional factors include, but are not limited to, those associated with the Chapter 11 cases of PG&E Corporation and the Utility that commenced on January 29, 2019. PG&E Corporation and the Utility undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.
No Securities Offering
This is not an offering of securities and securities may not be offered or sold absent registration or an applicable exemption from the registration requirements.