Pacific Gas & Electric’s $24.5 Billion for Fire Victims Approved

A federal judge on December 17, 2019, approved a total of $24.5 billion of Pacific Gas & Electric (PG&E) settlements to pay as compensation for the victims of the catastrophic fires. The utility company had been in liability of around $30 billion after the incidence in which wildfires speeded across Northern California in 2017 and 2018 due to the failure of one of the company’s power lines.

Bankruptcy Conditions and Deadline of June 30, 2020

Many victims’ lawyers had blamed PG&E’s outdated equipment and managerial negligence, which led the cause for a series of deadly wildfires that erupted across Northern California in 2017 and 2018, killing dozens of people. In January 2019, the compensation claims filed by the victims’ family members and businesses accounted for around $36 billion and the company was nearly an insolvent.

Tuesday’s decision, which finalized the settlement, was considered as a victory for the utility company as the deadline for clearing the issue was set to June 30, 2020. Finally, the settlement saved the company from the possibility of bankruptcy, as it reached a compensation agreement before the deadline.

According to the company’s officials, “Judge Dennis Montali’s ruling is a major victory for PG&E. The company has spent months trying to gain support for a viable restructuring plan so it can emerge from the biggest utility bankruptcy in U.S. history by a state-imposed deadline of June 30, 2020.”

Meanwhile, Montali had also solved another problem of the company, which involved a rival company’s proposal to get PG&E out of insolvency. Reaching a settlement between PG&E and victims will prevent the company from facing a potentially lengthy trial that is likely to begin in 2020 to determine its liabilities and damages tied to the wildfires.

The Final Settlement for the Victims

Out of the total compensation amount, around $13.5 billion will be part of the settlement for victims’ claims, while $11 billion would be for the payment of the insurers of the company, which was roughly $20 billion earlier.

According to PG&E’s report, “Today marks an important milestone; the Bankruptcy Court has approved our settlement agreements resolving all major wildfire claims. This brings us one significant step closer to getting victims paid so they can rebuild their lives.”

PG&E still faces several issues as the California Governor Gavin Newsom has been pressurizing the company to choose a new board of directors who prioritize safety. PG&E requires Newsom’s approval so that the company can be a part of the California wildfire fund established by the legislature. The fund is meant for emergency financial support that would help all the state’s utilities to cover their liabilities in the event of future fires.

According to a statement released by the California Public Utilities Commission, “The charge against the company includes wildfires that occurred in 2017 in Butte, Calaveras, Lake, Mendocino, Napa, Nevada, Sonoma, and Yuba Counties, and the deadly 2018 Camp Fire.”

As the Commission continued, “The proposed settlement… prevents the utility from recovering $1.6 billion in wildfire-related costs from ratepayers and would fund an additional $50 million by PG&E shareholders in system enhancements and community engagement initiatives to strengthen its electric operations and maintenance in an effort to mitigate the risk of wildfires. This amounts to a total financial obligation by PG&E shareholders of $1.6 billion.” The proposed Tuesday settlement will be placed under the commission’s review and required approval.

I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.

You can reach out to me at: [email protected]

Leave a Reply

Your email address will not be published. Required fields are marked *