Pacific Gas & Electric Corp. files for bankruptcy

The San Francisco-based company provides electricity and natural gas to more than six million customers in Northern California.

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By Associated Press

SAN FRANCISCO — California regulators were poised for a bankruptcy declaration by the state's largest utility as it faces billions of dollars in potential damages from wildfires in the state.

Pacific Gas & Electric Corp. filed documents in a U.S. court Tuesday seeking Chapter 11 reorganization. The move comes despite state investigators determining last week that the utility's equipment was not to blame for a 2017 fire that killed 22 people in Northern California wine country.

The four members of the commission voted unanimously Monday at a raucous, hastily announced meeting to exempt PG&E from a longer approval process for bankruptcy credit and loans.

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The company cited hundreds of lawsuits from victims of that blaze and others in 2017 and 2018 when it announced this month that it planned to file for bankruptcy.

It's already facing lawsuits over a November blaze in the town of Paradise that killed at least 86 people and destroyed 15,000 homes, though its cause is still under investigation.

Legal experts said they still expected PG&E to move forward with bankruptcy in part because that would give the company space to formulate a plan to prevent its equipment from causing more catastrophic fires and reduce its future wildfire liability.

California may have to change an existing law that holds utilities entirely liable for damage caused by their equipment regardless of whether the company was negligent, said Kenneth Ayotte, who teaches corporate finance and bankruptcy law classes at the University of California, Berkeley School of Law.

PG&E would also be able to consolidate all wildfire lawsuits in bankruptcy court, where victims would have to tussle with creditors and would likely end up with less money.

Monday's CPUC meeting may have provided a glimpse of the acrimony that would accompany any bankruptcy filing. Protesters repeatedly denounced and spoke over members of the commission and booed and shouted, "Shame," as it voted to allow PG&E to immediately obtain credit and loans as part of any Chapter 11 filing. PG&E has said it has lined up $5.5 billion in credit and loans so it could continue operating during bankruptcy.

Commissioner Martha Aceves said the CPUC's decision would allow "the continuation of the lights being on" if PG&E declared bankruptcy. She was then drowned out by protesters in the crowd. Commission President Michael Picker said the decision did not "encourage or enable" the company to seek bankruptcy and was not in any way an endorsement of that decision.

The commission faced criticism after it gave short notice of the meeting. State law generally requires multiple days of notice for public meetings, but the CPUC cited an exception for emergency situations that affect public health or safety.

Reuters contributed.