PG&E Corp. and Pacific Gas and Electric Co. (together PG&E) recently filed a joint Chapter 11 Plan of Reorganization in the U.S. Bankruptcy Court for the Northern District of California. The plan is another step in a multi-step process as the PG&E works to compensate wildfire victims and emerge from Chapter 11 while continuing to improve safety and operational performance for its customers. It will be updated as developments require.
The plan proposes a rate-neutral framework that fairly recompenses wildfire victims and other stakeholders, prioritizes the interests of customers and communities, and meets the PG&E’s legal obligations. It comprises the following, among other things:
- Compensation of wildfire victims and certain limited public entities from a trust funded for their benefit in an amount to be determined by the Bankruptcy Court not to exceed US$8.4 billion;
- Compensation of insurance subrogation claimants from a trust funded for their benefit in an amount to be determined by the Bankruptcy Court not to exceed US$8.5 billion;
- Payment of US$1 billion in full settlement of the claims of certain public entities relating to the wildfires, as previously announced;
- Payment in full, with interest, of all prepetition funded debt obligations, all prepetition trade claims and employee-related claims;
- Assumption of all power purchase agreements and community choice aggregation servicing agreements;
- Assumption of all pension obligations, other employee obligations, and collective bargaining agreements with labor;
- Future participation in the state wildfire fund established by Assembly Bill 1054; and
- Satisfaction of the requirements of Assembly Bill 1054.
PG&E is on track to achieve confirmation of the plan in advance of the June 30, 2020, deadline set forth in Assembly Bill 1054 for participation in the newly established state wildfire fund.
"Under the plan we filed recently, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California’s clean energy goals," said Bill Johnson, PG&E Corp.’s chief executive officer and president. "Throughout this process, we remain focused on the guiding principles of safely and reliably delivering energy to our customers, further reducing the risk of wildfires, and continuing to support the state’s clean energy goals. I am confident that we can, and will, provide better service to our customers and communities, and our Plan of Reorganization is another step in this process."
The PG&E intends to work with financial institutions to obtain up to US$14 billion of total equity financing commitments. All proceeds of the equity commitments will be used to pay wildfire victims and help fund the PG&E’s contributions to the state wildfire fund.
The plan is subject to confirmation by the Bankruptcy Court in accordance with the provisions of the Bankruptcy Code and to the occurrence of the effective date in accordance with the conditions set forth.
The PG&E’s Plan of Reorganization is available here.