PG&E: California governor says plan falls short, exploring takeover

By Caroline Salls

Pittsburgh, Jan. 23 – California Gov. Gavin Newsom said PG&E Corp.’s proposed plan of reorganization does not meet the requirements of a state law that would give the company access to crucial wildfire funds and asked the U.S. Bankruptcy Court for the Northern District of California to deny approval of a funding package until significant amendments are made to the plan.

In an objection filed Wednesday to PG&E’s motion for approval to enter into equity and debt financing commitments, Newsom said his staff has held numerous discussions with the company, providing clear guidance on changes needed to align the plan with the requirements of Assembly Bill 1054.

“The debtors and the shareholder proponents are well aware that the debtors’ plan must comply with AB 1054 for the emerging utility to have access to the fund provided in the statute,” Newsom said. “In fact, absent AB 1054 the debtors appear to lack a path to a feasible plan.

“Yet, despite the governor’s unequivocal statements, and continuous engagement by the governor’s advisers, the debtors and the shareholder proponents have yet to make a single modification to the debtors’ plan as filed with this court to address its many deficiencies.”

Newsom said the statute explicitly states that PG&E will benefit from the wildfire fund only if it meets the obligations to the people of California as set forth in the statute.

Given PG&E’s refusal to implement the changes necessary to complete the required transformation and satisfy AB 1054, Newsom said he is pursuing strategies to protect California’s interests through further intervention, including a state takeover of the utility.

Instead of making the necessary changes to the plan, Newsom said PG&E is instead trying to leverage the Chapter 11 process to force the California Public Utilities Commission (CPUC) to approve, and the state of California to accept, a sub-optimal plan.

“Allowing the debtors to enter into the exit financing commitments will only further embolden the debtors’ strategy,” the objection said.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.