Culpability for Camp Fire leads to bankruptcy prep for California utility monopoly PG&E

PG&E's mistakes have prompted activists to call for nationalizing the state's largest utility company

By Nicole Karlis

Senior Writer

Published January 15, 2019 1:11PM (EST)

Cars destroyed by the Camp Fire sit in the lot at a used car dealership on November 9, 2018 in Paradise, California. (Getty Images/Justin Sullivan)
Cars destroyed by the Camp Fire sit in the lot at a used car dealership on November 9, 2018 in Paradise, California. (Getty Images/Justin Sullivan)

Trouble looms for California's largest utility company, Pacific Gas & Electric Corp. (PG&E), whose shoddy transformers likely sparked the state's deadly and destructive Camp Fire in November 2018. On Monday, the company announced it will file for Chapter 11 bankruptcy protection as its faces $30 billion in potential liability costs.

According to the company's official announcement:

The Company today provided the 15-day advance notice required by recently enacted California law that it and its wholly owned subsidiary Pacific Gas and Electric Company (the "Utility") currently intend to file petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on or about January 29, 2019.

During this process, the Company is also committed to continuing to make investments in system safety as it works with regulators, policymakers and other key stakeholders to consider a range of alternatives to provide for the safe delivery of natural gas and electric service for the long-term in an environment that continues to be challenged by climate change. PG&E expects that the Chapter 11 process will, among other things, support the orderly, fair and expeditious resolution of its potential liabilities resulting from the 2017 and 2018 Northern California wildfires, and will assure the Company has access to the capital and resources it needs to continue to provide safe service to customers.

PG&E said it does not anticipate that customers will be directly impacted by this move.

"The people affected by the devastating Northern California wildfires are our customers, our neighbors and our friends, and we understand the profound impact the fires have had on our communities and the need for PG&E to continue enhancing our wildfire mitigation efforts," said John R. Simon, PG&E Corporation Interim CEO. "We remain committed to helping them through the recovery and rebuilding process. We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion."

According to the company's filing with the Securities and Exchange Commission, if the company is found legally responsible for some, or all, of the costs related to the 2017 and 2018 Northern California wildfires, its liability could exceed $30 billion.

On Sunday night, the company announced the CEO would be stepping down.

"While we are making progress as a company in safety and other areas, the Board recognizes the tremendous challenges PG&E continues to face," Richard Kelly, chair of PG&E's board, said. "We believe John is the right interim leader for the company while we work to identify a new CEO."

State-wide, activists have been calling for PG&E — which despite being a public utility operates as a for-profit regulated monopoly — to be nationalized or municipalized. "PG&E’s failure to maintain older equipment, failure to trim surrounding trees in accordance with state law, and their diversion of funds earmarked for infrastructure upgrades into more lucrative projects ...  shares a structural link to profit-driven decisions," Eric Ruud, whose house burned down in the Camp Fire, wrote in Jacobin.

By Nicole Karlis

Nicole Karlis is a senior writer at Salon, specializing in health and science. Tweet her @nicolekarlis.

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