The good news is that your electricity will stay on. The bad news is that PG&E is now playing a game of chicken with the Legislature over who is going to pay for the Camp Fire’s catastrophic destruction. Senate Bill 901 allows PG&E to pass the cost of fire damage along to rate payers, but only for fires that started after 2018.
About a month after SB901 became law, a PG&E transmission line failed in Butte County, igniting the most destructive wildfire in California history. The Camp Fire killed 86 people and destroyed almost 19,000 structures.
PG&E estimates it’s liable for $30 billion, an inflated figure, for the fires it caused in the period of time not covered by SB901. They only carried $840 million worth of liability insurance, which covers less than 3% of what they think they owe. No business in their right mind would carry so little insurance, but PG&E believes that it will win a staring contest with the Legislature, and be allowed to pass the costs to customers.
And that staring contest begins now.
According to a document filed this week with the Securities and Exchange Commission, PG&E knows it could borrow money or sell more stock, but they don’t know if they’ll be able to raise their prices, so bankruptcy is the best option for their stakeholders:
PG&E believes that it currently could access, outside of a restructuring under Chapter 11, a significant amount of capital, but only in the form of secured indebtedness, using the Utility’s assets to secure such additional funding, or in more esoteric forms of alternative capital that would be relatively dilutive or expensive.
[But this] is not in the best interests of PG&E and its stakeholders, and would not address the fundamental issues and challenges PG&E faces, including uncertainty regarding whether, when and to what degree the Utility will be able to recover costs related to wildfires through ratemaking.PG&E Form 8-K, filed January 13, 2019
Chapter 11 bankruptcy isn’t “going out of business”, it’s a protection from paying debts while a company re-organizes itself. While in Chapter 11 protection, a company can borrow money to fund its operations, and those loans get paid back before anything else. When a company has fixed its finances, it emerges from Chapter 11 bankruptcy.
But this could take years. That’s years the fire victims could go without compensation. It’s years that PG&E will continue to lobby the Legislature to change the rules to allow it to charge customers for the Camp Fire damage.
And why wouldn’t they? With SB901, the Legislature has already shown that it won’t stand up to PG&E.