PG&E Corp., the California utility giant that went bankrupt five months ago amid crippling wildfire liabilities, has reached a $1 billion settlement with local government agencies that were harmed by blazes its equipment ignited.
The deal between PG&E and 14 public entities includes a settlement for the town of Paradise, which was destroyed in November’s Camp Fire — the deadliest in California history.
The agreement doesn’t affect lawsuits filed by individual homeowners and businesses against the San Francisco company, owner of California’s largest utility, and it must be approved by the judge overseeing the bankruptcy case.
Shares of the company rose as much as 5.5% on the news before paring most of those gains in after-markets trading late Tuesday.
The settlement is one step forward for PG&E, which is working through the largest utility bankruptcy in U.S. history. The company has been juggling the interests of wildfire victims, activist investors and state lawmakers and regulators as it tries to come up with a restructuring plan.
“What we hope is that PG&E can come out of bankruptcy as soon as possible so these funds can be paid,” said John Fiske, an attorney with the Baron & Budd law firm representing the public agencies.
PG&E described the settlement in an emailed statement as “an important first step toward an orderly, fair and expeditious resolution of wildfire claims and a demonstration of our willingness to work collaboratively with stakeholders to achieve mutually acceptable resolution.”
The settlement covers the 2015 Butte Fire, the devastating 2017 Wine Country fires and last year’s Camp Fire, which killed 85 people. More than half of the total settlement amount — $582 million — would pay for Camp Fire damages, with Paradise receiving $270 million and its parks and recreation district getting $47.5 million. Butte County would receive $252 million, while Yuba County would get $12.5 million.
Butte County’s district attorney has been considering criminal charges against the company over the fire, which state investigators blamed on a PG&E power line. The settlement announced Tuesday would have no effect on any criminal case, Fiske said.
Nine counties and cities would, together, receive $415 million related to fires that tore across Northern California’s wine country in October of 2017. And the Calaveras County Water District would get $3 million to cover damage from the 2015 Butte Fire, which was started by a tree leaning into a power line.
Also on Tuesday, California regulators asked for comment on proposals designed to improve PG&E’s safety culture. Among the proposals: splitting the company’s gas and electric operations into separate utilities or selling its gas assets outright; a periodic review of PG&E’s certificate to operate; eliminating PG&E’s holding company structure; and linking the company’s profits to safety performance.
“This is a company that is in Chapter 11 related to their perceived safety performance,” said Paul Patterson, an utility analyst at Glenrock Associates. “One has to wonder if any of these proposals would provide any meaningful additional incentive.”
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