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Will California’s PG&E file Bankruptcy?
If the Pacific Gas and Electric Co. are held liable for the deadly November 2018 wildfire in Northern California, it could add billions to the company’s debt. The company’s insurance only covers $1.5 billion, coming far short of the estimated $15 billion in liabilities.
Financial Ruin
While the utility company hasn’t made any announcements regarding bankruptcy, plunging stocks and the already $15 million in liabilities for the October 2017 wildfires could force the utility company into financial ruin. PG&E has $18 billion in unsecured bonds; these debts will have equal priority during bankruptcy to get repaid as the roughly $30 billion in expected liabilities from the 2017 and 2018 wildfires.
Huge Lawsuits
Michael Picker, president of the California Public Utilities Commission, said the state would work with PG&E so the company would not be forced into bankruptcy by huge debts from lawsuits.
Under a new law signed last September, PG&E will be able to pass some of the wildfire costs onto customers. The average customer will pay an extra $5.20 for every billion dollars the company must finance to pay for wildfire liabilities.
Bankruptcy Test
SB901 lets utilities use bonds that customers will pay off over time. But first, the utility company needs to go through a bankruptcy stress test to determine how much of the cost it can absorb on its own. The rest can be passed onto customers.Similar laws may be passed for the 2018 wildfire if PG&E is determined to be liable. More than 630 people are missing, and 63 deaths are attributed to the November fires still raging.
In a regulatory filing disclosure, PG&E stated it had experienced tower damage and outage on a nearby transmission line just 15 minutes before the fire started. This disclosure launched the current lawsuits.
In last year’s fire, State investigators found PG&E to be responsible for 17 of the 21 fires in Northern California that October.
If tragedy hits you and your family and you are unable to keep up with the demands of creditors and basic living expenses, consider contacting a Sacramento bankruptcy attorney to discuss what options you may have.