Company on Track to Participate in New State Wildfire Fund
PG&E Expects to Emerge from Chapter 11 In July
SAN FRANCISCO, Calif. - PG&E Corporation and Pacific Gas and Electric Company (together "PG&E") announced today that the United States Bankruptcy Court for the Northern District of California has confirmed the company's Chapter 11 Plan of Reorganization (the Plan). This follows the California Public Utilities Commission's approval of the Plan on May 28, 2020.
"Today's ruling in the Chapter 11 proceeding concludes the process of approving PG&E's Plan of Reorganization and is a critical milestone that brings us one step closer to compensating wildfire victims fairly and quickly and sets the course for PG&E's future. We appreciate the extensive collaboration among a broad range of stakeholders that brought us to this point as we work to reimagine the company," said CEO and President of PG&E Corporation Bill Johnson.
"During this past week, we have heard the victims of the 2018 Camp Fire share their traumatic and tragic experiences in a Butte County courtroom. We heard every word and we will never forget their pain and loss. With respect and humility, we came before the court, the victims and the community to be held accountable and accept responsibility for our role in the Camp Fire. All 23,000 PG&E employees are committed to making sure our equipment never again causes another catastrophe."
"No apology, no plea, no sentencing can undo that damage, and no passage of time can lessen the anguish we heard expressed in court. While nothing will repair the wounds caused by the Camp Fire, we hope the actions we are taking to reduce wildfire risk, harden our system and get victims compensated will begin to help restore the trust of our communities and their confidence that we are working to keep them safe."
"PG&E is committed to emerging from Chapter 11 as a fundamentally improved and transformed utility that meets the highest safety, governance, and operational standards," Johnson concluded.
Upon emergence from Chapter 11, PG&E will be eligible to participate in the state's new go-forward wildfire fund.
PG&E expects to emerge from Chapter 11 in July. Upon emergence, all wildfire settlements provided for in the Plan of Reorganization will be implemented, including the immediate funding of the Fire Victim Trust through which individual wildfire victim claims and certain other wildfire-related claims will be determined, administered, and paid.
The Bankruptcy Court has already approved the selection of the Trustee and Claims Administrator for the Fire Victim Trust so that the Fire Victim Trust will be in a position to administer claims and make payments to wildfire victims as quickly as possible following the funding of the Fire Victim Trust when the Plan becomes effective.
Wildfire Victim Settlements
As part of the Chapter 11 cases, PG&E previously reached settlements with all major wildfire victims' groups to be implemented pursuant to PG&E's Plan, valued at approximately $25.5 billion, including:
- An approximately $13.5 billion settlement resolving claims by individual victims and others relating to the 2015 Butte Fire, 2017 Northern California Wildfires (including the 2017 Tubbs Fire), and the 2018 Camp Fire; this includes stock valued at approximately $6.75 billion based on an agreed-upon formula (the ultimate value of the stock could be higher or lower);
- A $1 billion settlement to satisfy the wildfire claims of certain cities, counties, and other public entities; and
- An $11 billion settlement with insurance companies and other entities that paid claims by individuals and businesses related to the wildfires.
Plan Commitments to Position PG&E for Long-Term Success
The company recently announced the selection of a new Board of Directors that will be in place upon emergence to help guide it post Chapter 11, including 11 new board members with substantial expertise in diverse areas critical to the company's work.
In addition to announcing the new board, PG&E made a series of commitments, some of which are already underway, regarding its governance, operations, and financial structure, all designed to further prioritize safety and expedite the company's successful emergence from Chapter 11. The company made these commitments working with the Governor's Office and incorporating guidance from CPUC President Batjer, which was included in the full Commission's approval of the Plan.
The commitments include:
- Supported the CPUC's enactment of measures to strengthen PG&E's governance and operations, including enhanced regulatory oversight and enforcement that provides course-correction tools as well as stronger enforcement if it becomes necessary;
- Began hosting a state-appointed observer to provide the state with insight into the company's progress on safety goals before the company exits Chapter 11;
- Appointing an independent safety monitor when the term of the court-appointed Federal Monitor expires;
- Establishing newly expanded roles of Chief Risk Officer and Chief Safety Officer, with both reporting directly to the PG&E Corporation CEO;
- Formed an Independent Safety Oversight Committee to provide independent review of operations, including compliance, safety leadership, and operational performance;
- Assumed all collective bargaining agreements with labor unions, pension obligations, and other employee obligations, and all power purchase agreements and Community Choice Aggregation servicing agreements;
- Reformed executive compensation to further tie it to safety performance and customer experience;
- A commitment that PG&E Corporation will not reinstate a common stock dividend until it has recognized $6.2 billion in non-GAAP core earnings, which PG&E believes will contribute an additional $4 billion of equity to pay down debt and invest in the business;
- Filed a proposal with the CPUC requesting a rate-neutral $7.5 billion securitization transaction after PG&E emerges from Chapter 11 in order to finance costs in an efficient manner that benefits customers and accelerates payment to wildfire victims; and
- Committing not to seek recovery in customer rates of any portion of the amounts that will be paid to victims of the 2015, 2017, and 2018 wildfires under the Plan when PG&E emerges from Chapter 11 (except through the rate-neutral securitization transaction).
Resources and Information
Additional resources for customers and other stakeholders, and other information on PG&E's filings, can be accessed by visiting PG&E's restructuring website at www.pge.com/reorganization. Court filings and other documents related to the Chapter 11 process in the U.S. are available on a separate website administered by PG&E's claims agent, Prime Clerk, at https://restructuring.primeclerk.com/pge. Information from Prime Clerk is also available by calling 1-844-339-4217 (toll-free in the U.S.) or 929-333-8977 (for parties outside the U.S.), as well as by emailing firstname.lastname@example.org.
Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP are serving as PG&E's legal counsel; Lazard is serving as its investment banker; and AlixPartners, LLP is serving as the restructuring advisor to PG&E.
This news release includes forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E Corporation and Pacific Gas and Electric Company, including but not limited to statements about the expected timing of emergence from Chapter 11, PG&E's participation in the Wildfire Fund, implementation of wildfire settlements, and Plan commitments. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in PG&E Corporation and Pacific Gas and Electric Company's joint annual report on Form 10-K for the year ended December 31, 2019, their joint quarterly report on Form 10-Q for the quarter ended March 31, 2020, and their subsequent reports filed with the Securities and Exchange Commission (the "SEC"), which are available on PG&E Corporation's website at www.pgecorp.com and on the SEC website at www.sec.gov. Additional factors include, but are not limited to, those associated with the Chapter 11 cases of PG&E Corporation and Pacific Gas and Electric Company that commenced on January 29, 2019. PG&E Corporation and Pacific Gas and Electric Company undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. Each of PG&E Corporation and the Utility is a separate entity, with distinct creditors and claimants, and is subject to separate laws, rules and regulations. For more information, visit pgecorp.com.