PG&E Announces New Commitments that Resolve Governor’s Concerns About Plan of Reorganization; Continues to Make Progress To...
21 March 2020 - 9:16AM
Business Wire
Bankruptcy Court Approves PG&E Exit
Financing
PG&E Corporation and Pacific Gas and Electric Company
(together, “PG&E” or the “company”) announced that the company
filed today a motion with the Bankruptcy Court outlining new
commitments to its Plan of Reorganization (“Plan”). The Governor’s
Office has filed a statement in the Bankruptcy Court that is
supportive of the company’s Plan and its compliance with Assembly
Bill (AB) 1054.
“We appreciate the Governor’s statements in the Bankruptcy
Court. We now look to the California Public Utilities Commission to
approve the Plan through its established regulatory process, so
that we can exit Chapter 11, pay wildfire victims fairly and as
soon as possible, and participate in the State’s Wildfire Fund,”
said CEO and President of PG&E Corporation Bill Johnson.
New Commitments to Position PG&E for Long-Term
Success
PG&E has made a series of new commitments regarding its
governance, operations, and financial structure, all designed to
further prioritize safety and expedite the company’s successful
emergence from Chapter 11.
The new commitments include:
- Supporting 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;
- Agreeing to host an observer to provide the State with insight
into the company’s progress on safety goals before the company
exits Chapter 11;
- Agreeing that, in the unlikely event the Plan is not confirmed,
or PG&E does not exit Chapter 11 in a timely manner, an orderly
process for a sale of the business to the State or another party
will be commenced;
- A commitment not to reinstate a dividend for approximately 3
years, which is estimated to contribute an additional $4 billion of
equity to pay down debt and invest in the business;
- Pursuing a rate-neutral $7.5 billion securitization transaction
after PG&E emerges from Chapter 11, to reduce the cost of
financing for customers and to accelerate payments to wildfire
victims; and
- Committing not to seek recovery in customer rates of any
portion of the approximately $25.5 billion that will be paid to
victims of the 2017-2018 wildfires under the company’s plan when
PG&E emerges from Chapter 11 (except through the rate-neutral
securitization transaction).
The Governor’s Bankruptcy Court filing states that, assuming the
Bankruptcy Court and CPUC approve these commitments, PG&E’s
Plan of Reorganization “will, in the Governor’s judgment, be
compliant with AB 1054.” The Governor’s filing also states that a
rate neutral securitization under Senate Bill 901 that meets all
legal requirements would, in the Governor’s judgment, be in the
public interest, as it would strengthen the going-forward business
and support the company’s ability to provide safe, reliable,
affordable and clean energy to its customers.
Existing Commitments in PG&E’s Plan of
Reorganization
Previously, PG&E took a number of significant steps to
ensure its Plan complies with AB 1054, including: selecting a
substantial number of new members of the Boards of Directors of
PG&E Corporation and Pacific Gas and Electric Company upon
emergence from Chapter 11; pursuing a plan to regionalize the
company’s operations and its infrastructure to enhance the
company’s focus on local communities and customers; appointing an
independent safety advisor after the term of the court-appointed
Federal Monitor expires; and taking other safety and oversight
actions. Earlier this week, PG&E filed an updated plan to
incorporate the terms of prior settlements, among other
changes.
Exit Financing Approved
Another major milestone was achieved this week when the
Bankruptcy Court approved commitment letters with respect to
PG&E’s exit financing. This followed PG&E’s resolution of
outstanding wildfire claims with federal and state agencies in a
manner that minimizes the impact on the payment of wildfire
victims’ claims. PG&E’s Plan has the support of wildfire
victims’ groups, the company’s labor unions, and other key
stakeholders, including the Governor.
“Our Plan will position the company to make necessary safety and
wildfire mitigation investments in the coming years, partner with
the State in achieving its bold climate goals, and, importantly,
provide protection to California if the Chapter 11 process is not
concluded in a timely manner,” said Johnson. “We reaffirm our
commitment to delivering safe and reliable electric and gas service
and implementing needed changes across our business to become a new
and transformed company that is positioned to meet our commitments
to California and our customers.”
PG&E’s Plan remains subject to approval by the California
Public Utilities Commission and the Bankruptcy Court. The
Bankruptcy Court is scheduled to hold a hearing on the confirmation
of PG&E’s Plan on May 27, 2020, following a vote solicitation
process for relevant parties that will take place in the coming
weeks.
Wildfire Victim Settlements
As part of the Chapter 11 process, PG&E has previously
reached settlements with all wildfire victims’ groups to be
implemented pursuant to PG&E’s Plan, valued at approximately
$25.5 billion, including:
- A $1 billion settlement with cities, counties, and other public
entities;
- 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; and
- An $11 billion agreement with insurance companies and other
entities that paid claims by individuals and businesses related to
the wildfires.
Key Safety Improvements
Since the 2018 Camp Fire, PG&E has taken many additional
safety actions and implemented a risk-based, comprehensive approach
to reduce wildfire risks including enhanced inspections of the
company’s electric system, additional vegetation management, and
new operational protocols with short-, medium- and long-term plans
to make its system safer. PG&E’s goal is to help keep customers
and communities safe across its service territory. More information
about those safety investments and improvements is here.
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 (“Utility”), 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 http://www.pgecorp.com. In this press
release, they are together referred to as "PG&E."
Cautionary Statement Concerning Forward-Looking
Statements
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 the Utility. 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’s and the Utility’s
annual report on Form 10-K for the year ended December 31, 2019,
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 the Utility that commenced on January 29, 2019. PG&E
Corporation and the Utility 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.
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