Utility goes bankrupt

The announcement by the nation's largest utility that it is filing for bankruptcy puts Pacific Gas & Electric Co.'s problems squarely in the hands of Gov. Gavin Newsom and state lawmakers, who now must try to keep ratepayer costs down, ensure wildfire victims get the money they're owed and rethink California's energy picture in the face of climate change.

"This issue is all about three fundamental things: It is about safety, it's about reliability and it's about affordability," Newsom told reporters Monday afternoon after spending the day in and out of meetings with lawmakers about the pending bankruptcy.

Earlier in the day, PG&E announced it will file for Chapter 11 bankruptcy as it faces at least $30 billion in potential damages from lawsuits over catastrophic California wildfires in 2017 and 2018 that killed scores of people and destroyed thousands of homes. The announcement kicked off a 15-day window before the official filing. Newsom said he'd like to stave off the bankruptcy but it may not be possible.

"We'd like to see it avoided but we're not naive," he said. "I respect the taxpayer, I respect the ratepayer and I'm absolutely cognizant of those that lost their homes."

The filing would not make the lawsuits disappear, but would result in all wildfire claims being consolidated into a single proceeding before a bankruptcy judge, not a jury. That could shield the company from excessive jury verdicts and buy time by putting a hold on the claims.

"The chances of victims getting what they would've gotten without a bankruptcy are not good," said state Sen. Bill Dodd, a Napa Democrat.

How much and what the state can do remains to be seen. Lawmakers last year tried to prevent a threatened PG&E bankruptcy resulting from the 2017 fires by letting the utility pass on some of its costs to ratepayers, a move some critics dubbed a "bailout" for the utility. Democratic Assemblyman Chris Holden had considering introducing a similar bill that would pass on the costs of 2018 fires, but said Monday he's backed off that idea.

"Clearly PG&E has made a decision that the legislative arena is not where they feel they're going to get the kind of results that will go far enough," he said, adding that the decisions about PG&E's future now appear to be in the hands of bankruptcy court.

PG&E services about 40 per cent of California's utility customers, Newsom said, making it the nation's largest utility. It operates in three-quarters of California's land most vulnerable to wildfires, Newsom said. While PG&E's equipment has been named the cause of multiple recent fires, experts blame climate change for extending California's wildfire season and making blazes more deadly and destructive.

State officials are investigating whether the utility's equipment sparked the deadliest, most destructive wildfire in California history, a November blaze that killed at least 86 people and burned down 15,000 homes.

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