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PG&E Bankruptcy Deal Moves Forward as Governor Drops Opposition

March 17, 2020
Newsom ended his opposition to a $23 billion plan to help PG&E emerge from bankruptcy in summer 2020.

The outbreak of the novel coronavirus and its economic fallout may have softened California Gov. Gavin Newsom’s stance on Pacific Gas & Electric’s bankruptcy plan. According to reports, Newsom ended his opposition to a $23 billion plan to help PG&E emerge from bankruptcy in summer 2020.

The plan is for PG&E, one of California’s big three utilities, to recover from its bankruptcy in June and take advantage of the $21 billion in funding that the state’s wildfire insurance fund makes available. The fund was established to help PG&E and other power companies from their financial liabilities stemming from destructive wildfires courts linked to PG&E’s transmission and distribution equipment.

A court’s ruling that PG&E was legally liable for sparking the 2018 Camp Fire, the deadliest and most destructive wildfire in California history, drove the utility into bankruptcy.

Newsom’s opposition to the plan was based on how much the plan relied on debt refinancing. The plan also leaned on the state wildfire insurance fund, which might also be needed by the other big three utilities, Southern California Edison and San Diego Gas & Electric.

Newsom also said relying on debt might leave PG&E unable to upgrade and repair its power grid into one that can safely operate during dry and windy conditions and not cause future wildfires.

The governor also called on PG&E to replace its entire board of directors. The utility has agreed to shake up some of its board, but not all of it.

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