A multi-day confirmation hearing to consider Pacific Gas & Electric's (PG&E) reorganization plan kicked off Wednesday at the U.S. Bankruptcy Court, Northern District of California, marking what could be the last leg of the utility's bankruptcy proceeding.
Judge Dennis Montali, who is overseeing PG&E's reorganization, will decide whether PG&E's $58 billion plan to settle its wildfire liabilities and emerge from bankruptcy should be confirmed. PG&E is aiming to have the plan confirmed by June 30, failing which, it could lose the chance to access a $21 billion wildfire fund created by California legislators last year.
The deadline makes PG&E's confirmation hearing particularly critical, according to Michael Sweet, bankruptcy attorney and partner at Fox Rothschild, who represents some of PG&E's creditors. In most bankruptcies, debtors can go back to the drawing board if their plan isn't confirmed — "but here, because they have the overhang of the state requirement that they get this confirmed by June 30, if the plan isn't confirmed then all bets are off," he told Utility Dive.
The deadline for PG&E's creditors — which include tens of thousands of victims of wildfires that the utility's lines caused in Northern California — to vote on its reorganization plan was May 15. The plan would pay out $25.5 billion to resolve PG&E's fire liabilities, including a $13.5 billion trust, comprising half cash and half company stock, to compensate the victims.
In total, more than 85% of the wildfire victims cast votes accepting the plan, "moving PG&E one step closer to compensating fire victims and emerging from Chapter 11 as a stronger, financially sound company positioned for long-term success," PG&E Corp. President and CEO Bill Johnson said in a statement last week.
At the first day of the confirmation hearing, lawyers, as well as wildfire survivor William Abrams, quizzed Christina Pullo, vice president of global corporate actions at Prime Clerk, the company that administered the voting process. Around 87,000 claims were filed against PG&E, and Prime Clerk received approximately 44,900 "yes" votes and 6,100 ballots rejecting the plan, she said.
Now that the votes are in, Judge Montali will have to conclude whether certain standards are met and then determine whether the plan should be confirmed, Sweet said.
However, PG&E still needs the California Public Utilities Commission (CPUC) to give its plan the go-ahead. Commissioners are scheduled to vote on it Thursday and Sweet thinks it's unlikely that they will throw a wrench into the proceeding this late in the game.
"I don't think the PUC is going to derail this at this point," he said.
The proposed decision the commission is voting on has a built-in six-step oversight process that would allow the CPUC, if certain triggering events take place, to possibly revoke PG&E's certificate of public convenience and necessity. But "the PUC certainly could have put more consumer protections in place than it did," Mindy Spatt, spokesperson for ratepayer advocacy group The Utility Reform Network (TURN), told Utility Dive.
The agency had an opportunity to insist on increased oversight and didn't necessarily take it in all the ways TURN had urged, she said, and the six-step process in the proposal includes "a few steps too many."
"The commission already knows that PG&E has a pattern of negligence and that pattern has resulted in the deaths of its customers," she said.
PG&E is also scheduled to appear before the judge supervising its five-year criminal probation on Thursday. U.S. District Judge William Alsup imposed new conditions on the utility in an April order — including requiring it to hire its own employees to inspect trees and branches that could cause wildfires in its service area rather than outsourcing the work. But PG&E asked the judge to reconsider his order, noting that the conditions would hinder its ongoing wildfire mitigation work.