BERKELEY, Calif. (AP) — Pacific Gas & Electric on Tuesday fended off allegations that it’s breaking its promises to the victims of catastrophic wildfires ignited by the utility’s outdated equipment in Northern California as it tries to preserve its plan for getting out of bankruptcy in an unraveling economy.
Attorneys for a committee representing wildfire victims accused PG&E of the devious conduct during an acrimonious court hearing. PG&E’s lawyers scoffed at the allegations as a desperate bid to renegotiate a $13.5 billion settlement reached with wildfire victims four months ago.
The showdown is focused on the real value of the $13.5 billion deal, and when the money will be available to help more than 81,000 people who lost family members, homes and businesses during 2017 and 2018 because of the company’s negligence and fraying electrical grid.
The wildfire victims’ committee wants U.S. Bankruptcy Judge Dennis Montail to take the unusual step of approving a letter raising red flags about the settlement in the midst of the voting on PG&E’s complex plan for emerging from bankruptcy. The plan envisions paying out more than $25.5 billion in settlements, including the one with wildfire victims.
PG&E can’t prevent the letter from being sent, but it’s fiercely fighting the attempt to get a federal judge to put his stamp of approval on it. The San Francisco company fears Montali’s blessing would help rally the opposition to a plan that it needs to have approval by June 30 to qualify for coverage from a wildfire insurance fund created by California to help utilities deal with future risks.
Montali promised to issue a ruling in the next day or two after listening to nearly two hours of arguments that were occasionally disrupted by technical difficulties during a hearing by telephone because of the coronavirus pandemic.
The wildfire victims’ biggest concerns center on the rapidly declining value of PG&E’s stock amid the recent market turmoil as well as the possibility that the company might not raise all the money it needs to start paying people for its misconduct until late this year or early next year, said Robert Julian, a lawyer for the victims’ committee.
Half of the $13.5 billion settlement is supposed to be funded with PG&E stock, but the market turmoil has caused the company’s shares to lose half their value since Feb. 11. A veteran investment banker submitted a declaration last week in another court proceeding that the stock earmarked for the settlement is now worth $4.85 billion, a 28% reduction from the original target of $6.75 billion.
PG&E attorney Stephen Karotkin told Montali that it was always known the stock portion of the settlement could end up being worth more or less than $6.75 billion. He also pointed out that PG&E’s stock is currently worth more than its average price of $7.80 during the two months leading up to the Dec. 6 settlement. The company’s shares closed Tuesday at $8.57.
Another attorney for wildfire victims, Gerald Singleton, told Montali that he still thinks the current settlement is the best deal available. “There are risks here, but we believe the benefits outweigh the risks,” said Singleton, who represents more than 7,000 victims.
Julian said worries about PG&E’s stock price are being compounded by uncertainty about when the victims will be allowed to sell their shares to get the money they need to rebuilt their lives. The victims will own a nearly 21% stake in the company, a chunk so large that it will have to be sold in periodic phases to prevent a collapse in the stock price.
The wildfire victims committee also had entered into the settlement believing PG&E would have lined up the financing for the cash portion by Aug. 29, according to Julian. He told the judge he now believes PG&E plans to hold off on securing some loans until late December or early January. Karotkin didn’t address that allegation in the hearing, but insisted the Aug. 29 date was never a concrete commitment.
The doubts about PG&E’s plan have reached the point where a growing number of victims “don’t believe anything PG&E has to say in these confirmation hearings,” Julian said.
Karotkin blasted Julian for trying to win court approval of a letter that’s “totally inappropriate” and “misleading.”
If the letter is approved, Julian said it would advise wildfire victims that more information is still being gathered about problems in PG&E’s plan before the May 15 deadline for submitting their ballots. Another letter would be sent April 25 to advise victims on whether or not PG&E addressed the problems.