A new law is helping utilities prevent a possible California Bankruptcy, but it appears as though the direct cost may be the burden of California utility consumers. The new law, signed in the last week of September 2018, is already drawing stringent criticism from Californians. Critics are calling the new measure, which allows California utility companies to bill customers to help pay future legal settlements from the 2017 wildfires, a bailout to prevent the bankruptcy of Pacific Gas & Electric Co., the nation’s largest public utility. Because lawmakers have determined that a large utility filing bankruptcy in California would be catastrophic, the bill will allow the Public Utility Commission to pass along the cost of liabilities to consumers.

PG&E Lawsuits

The embattled Pacific Gas & Electric Co. (NYSE: PCG) is facing multiple lawsuits from insurance companies who have spent over $10 billion covering insured losses and are subsequently looking to recoup their own costs from the tragic disasters. California Courts have determined the utilities were directly liable for the 2017 Northern wildfire damages for failing to follow predetermined safety precautions. Still fresh in the minds of Northern Californians, the 2017 wildfires burned over 245,000 acres across Butte, Napa, Sonoma, and Solano counties. State laws and regulations required that utility companies provide compensation for property damaged by its equipment.  In each case the courts found that vegetation was too close to PG&E power lines and that the fires directly stemmed from these violations.

How Much Will Consumers Pay

Just how much of a surcharge that PG&E will pass on to its customers is at the moment unclear. The reason being is that the total amount of damages PG&E will be responsible for hasn’t been decided. Once a final agreement is reached of how much financial damage the company can absorb, consumers could see a fee of $5.20 per $1 billion of financing that PG&E must acquire.

Lawmakers also hinted that the bill will assist with future wildfires and ultimately prevent a potentially catastrophic bankruptcy. For more information about Chapter 11 California bankruptcy cases, read more at Bankruptcy & Debt Resolution Attorneys.