On Thursday, the California Public Utilities Commission (CPUC) unanimously approved the reorganization plan of PG&E as part of its Chapter 11 Bankruptcy proceeding, which included refinancing debt and other safety and governance-related changes. These provisions were incorporated so that PG&E can access AB 1054 wildfire financing for liabilities that arise after July 12, 2019.
The CPUC determined PG&E’s plan is ratepayer neutral. Specifically, PG&E’s Reorganization Plan provides:
- $13.5 billion (cash and common stock) for payment of individual and other wildfire claims
- $11 billion (cash) to satisfy insurance subrogation claims
- $9.575 billion in existing debt claims reinstated
- $11.85 billion in existing debt refinanced with newly issued debt
- Securitization of up to $7.5 billion of future revenues to pay wildfire claims;
- Payment in full of general unsecured claims and other liabilities and employee-related claims
- Assumption of all power purchase agreements and community choice aggregation agreements
- Assumption of all pension obligations and collective bargaining agreements with labor
- Suspension of issuance of a common dividend for three years, which will contribute $4 billion to pay down debt and invest in the business
- Using interest rate savings from refinancing pre-petition debt for the benefit of ratepayers
The CPUC established enhanced oversight and enforcement of PG&E’s safety performance, including a change in the management structure of PG&E and Board of Directors compensation structure. As part of that revised governance structure, PG&E will return to a regional governance model that is more responsive to local needs.
CPUC’s decision paves the way for 1) wildfire victims to receive compensation for their losses per their settlement agreement, and 2) PG&E to participate in the Wildfire Insurance Fund to pay future eligible claims to wildfire victim if the wildfire was caused by utility infrastructure.
The full decision of the CPUC can be found here.