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It's Down to the Wire for PG&E

Bankruptcy settlement pleases few, but faces crucial June 30 deadline



The Pacific Gas and Electric Company faces a crucial deadline: Before June 30, it must get both the state of California and a federal judge to approve its plan for getting out of bankruptcy. If it doesn't meet the deadline, it won't be eligible for help from the state Wildfire Fund—help that is needed to make the plan work.

The company entered a Chapter 11 bankruptcy process in fall 2018 because it couldn't pay an estimated $30 billion in legal claims from 2017 and 2018 wildfires, which killed more than 100 people, destroyed tens of thousands of buildings and burned vast areas of forest. In March, Gov. Gavin Newsom, who has been sharply critical of PG&E, announced he and the company had agreed on a proposed plan that would mean "the end of business as usual for PG&E."

The plan outlines complicated financial strategies for "reorganizing" the debt, issuing new debt and stock, and paying specific amounts from shareholders' dividends and assets. It also would make major changes in PG&E management and give state regulators more "accountability tools," Newsom said. And the deal provides for a state takeover of the utility if PG&E doesn't meet its financial, safety and reliability obligations.

Many fire victims, insurers and creditors have signed off on the plan. But at the May 7 meeting of the California Public Utilities Commission, which oversees PG&E, there was "a big show of activists against the deal," said Mari Rose Taruc of the Reclaim Our Power Utility Justice Campaign, a coalition of many of the states' major environmental and social-justice organizations.

Critics say the deal shortchanges fire victims, fails to ensure safety, lacks strong enough accountability measures and would result in higher rates for customers. Reclaim Our Power is planning a pandemic-appropriate protest in San Francisco on May 20, the day before the commission is scheduled to vote on the proposal. The commission's approval is required for the plan to go forward.

Some critics are calling for specific changes in the plan, especially tighter rules for state oversight of financial decisions and safety improvements. Reclaim Our Power wants to take it further.

"PG&E is not going to change to the point where we can be confident that the utility and the government will protect us during the upcoming wildfire season from getting burned up or having our power shut off," Taruc said.

Her coalition wants the state to transfer control of the utility from PG&E and Wall Street to democratic decision-making by frontline communities and workers.

The proposed settlement would give $13.5 billion to people who lost homes, businesses or loved ones in the 2017–18 fires. By some estimates that's less than half of what they are due, and half of that amount is to be paid in PG&E stock rather than in cash. But in a vote held May 15, the deal won overwhelming support from fire-victim plaintiffs.

Some fire victims remain critical.

"There should be immediate payment in cash directly to survivors and impacted communities, not a split of stocks and cash," said Gabriela Orantes of Sonoma County's North Bay Organizing Project.

Her organization is part of the Justice Recovery Partnership, a group of "grassroots organizations that have been on the ground in communities that have experienced fires and power shutoffs." They don't think it's fair to ask fire victims to share in the risk of PG&E's volatile stock price, especially when the plan also calls for payment in cash to the other claimants—insurance companies and local governments.

Orantes added that some of the payment won't come until 2021 or 2022 and is contingent on the success of particular financial maneuvers. A group called Survivors of the PG&E Fires reported that fire victims were subject to a high-pressure campaign to get them to vote "Yes," including by some of the lawyers representing them.

In addition to the fires, last summer's power shutoffs created serious problems, especially for people with disabilities.

"They affect us in many ways differently from people without disabilities," said Jay Shalizar, of the Disability Justice Culture Club. Some people need ventilators and other equipment to survive, or medication that requires refrigeration, she said.

During last year's power shutoffs, Shalizar asked a friend who uses a ventilator what she would do if she lost electricity.

"She said, 'Lie here and die,'" Shalizar said. Shalizar said she and others "had to pool resources, get extra batteries for her ventilator and her wheelchair. Then we bought her a generator."

The group also mobilized to protect people with heart and lung problems and chemical sensitivities from the effects of wildfire smoke.

"People got really sick because of how polluted the air was," she said. "We ended up going to people's houses, did DIY air purifying, sealed doors and windows, pooled resources to pay for hotels."

PG&E has committed to cutting the duration of power shutoffs in half, but Shalizar said the reorganization proposal doesn't include "anything to help people stay alive" during future power shutoffs. Disability-rights activists have joined in protests against PG&E, including a blockade of its headquarters last December, which also included Reclaim Our Power, youth climate activists and others.

Of course, a main goal of any plan for PG&E is to prevent future wildfires. The proposed deal calls for a Wildfire Mitigation Plan, but the specifics are not yet determined. Governor Newsom's current proposed budget would add more staff to the Public Utilities Commission's Wildfire Safety Division, which must approve PG&E's annual wildfire safety plans. But Taruc said these measures don't reassure her.