Pacific Gas & Electric (PG&E), based in San Francisco, California, warned state lawmakers that it may need to declare bankruptcy or reorganize and restructure its debt, depending on its liability for the wildfires that devastated parts of California.
PG&E released a statement stating: “The loss of life, homes, and businesses in these extraordinary wildfires is simply heartbreaking, and we remain focused on helping communities recover and rebuild… We look forward to the opportunity to carefully review the Cal Fire reports to understand the agency’s perspectives. Based on the information we have so far, we continue to believe our overall programs met our state’s high standards.” Meanwhile, Cal Fire said the utility violated state law governing vegetation management that killed a number of people.
The utility said the state of California needs to address issues of insurance affordability and to reform California’s unsustainable policies regarding wildfire liability. PG&E told the US Securities and Exchange Commission that the company “will record a significant liability for losses” from the wildfires.
California is one of the only states in the US where courts have applied inverse condemnation liability to events which means PG&E could be liable for property damages and attorneys’ fees even if it followed established state guidelines.
PG&E Filed Bankruptcy Before
PG&E filed Chapter 11 bankruptcy in 2001 during the California electricity crisis. It emerged from bankruptcy in 2004. Its investment grade credit ratings were restored and valid creditor claims were satisfied.