PG&E to file for bankruptcy, CEO resigns in aftermath of wildfires

Dwayne Harmon
January 15, 2019

As it faces potentially colossal liabilities over deadly California wildfires, embattled utility Pacific Gas & Electric Co. announced Monday it will file for bankruptcy protection, a day after its CEO resigned.

The utility and its main unit, Pacific Gas and Electric Co., plan to file on or around January 29.

The company may alert employees as soon as Monday about its preparations for a potential bankruptcy filing in compliance with a state law about providing notice at least 15 days before such an event, one of the people said. Investigators found that the power utility had caused 17 major wildfires in 2017, and evidence suggests the company may be responsible for others in 2018 as well, The Wall Street Journal reports.

Debtor-in-possession financing is used by companies that have filed for Chapter 11 bankruptcy protection to help reorganize and turn the company around. In light of today's bankruptcy announcement, the immediate focus is on ensuring that Californians continue to have safe and reliable electric and gas service, said Newsom.

PG&E's general counsel John Simon will serve as interim CEO until the board of directors finds a new head.

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"We remain committed to helping them through the recovery and rebuilding process", he added.

PG&E said it "does not expect any impact to electric or natural gas service for its customers as a result of the Chapter 11 process".

PG&E's bankruptcy filing has been a possibility for months, but its likelihood rose to near-inevitability in the first few weeks of 2019 as S&P and Moody's cut its credit rating to near-junk status and amid continued declines of its battered share price. At least two small gas suppliers have restricted sales to PG&E out of concern that the company won't be able to pay, people with direct knowledge of the situation said last week. It said it believes bankruptcy is in the best interests of not just wildfire claimants but also other creditors, its shareholders and customers. It also indicated that it will continue to provide natural and electric to its customers during the restructuring phase.

Assure the company has access to the capital and resources necessary to support ongoing operations and enable PG&E to continue investing in its systems, infrastructure and critical safety efforts, including investing in its Community Wildfire Safety Program, an additional precautionary safety measure implemented following the 2017 Northern California wildfires to further reduce wildfire risk. On Sunday, the company started searching for a new leader after Geisha Williams, 57, quit as CEO. "In the end, California regulators and politicians will have to balance PG&E's financial health with customer costs", wrote Travis Miller, an energy and utilities strategist for Morningstar.

Shares of the company dropped almost 50 percent in early trading Monday, one day after the company said Chief Executive Geisha Williams was stepping down.

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