PG&E, Pacific Gas and Electric propose joint plan of reorganization

By Caroline Salls

Pittsburgh, Sept. 9 – PG&E Corp. and Pacific Gas and Electric Co. filed a joint plan of reorganization Monday with the U.S. Bankruptcy Court for the Northern District of California.

According to a company news release, the plan is another step in a multi-step process as PG&E works to compensate wildfire victims and emerge from Chapter 11 while continuing to improve safety and operational performance for its customers.

PG&E said it is on track to achieve confirmation in advance of the June 30, 2020, deadline set forth in Assembly Bill 1054 for participation in a newly established state wildfire fund.

The company said the plan proposes a rate-neutral framework that fairly compensates wildfire victims and other stakeholders, prioritizes the interests of customers and communities and meets PG&E’s legal obligations.

Under the plan, wildfire victims and some limited public entities will be compensated from a trust funded in an amount to be determined by the bankruptcy court, but not to exceed $8.4 billion.

Insurance subrogation claimants will be compensated from a trust not to exceed $8.5 billion.

The company will pay $1 billion in full settlement of the claims of public entities related to the wildfires.

All pre-bankruptcy funded debt obligations, trade claims and employee-related claims will be paid in full with interest.

All power purchase agreements and community choice aggregation servicing agreements will be assumed, as will all pension obligations, other employee obligations and collective bargaining agreements.

The plan calls for PG&E’s future participation in the state wildfire fund established by Assembly Bill 1054 and satisfaction of the requirements of that bill.

PG&E said its Chapter 11 emergence financing is expected to include a substantial equity financing component, which could include a rights offering to existing shareholders or one or more offerings in the capital markets.

The company said it intends to work with financial institutions over the next several weeks to obtain up to $14 billion of total equity financing commitments. All proceeds of the equity commitments will be used to pay wildfire victims and help fund PG&E’s contributions to the state wildfire fund.

The plan is subject to confirmation by the bankruptcy court and the occurrence of the effective date in accordance with plan conditions.

The electric and natural-gas utility is based in San Francisco. The company filed bankruptcy on Jan. 29, 2019 under Chapter 11 case number 19-30088.

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