Lawyer Says She Doesn’t Believe PG&E Will File for Chapter 11
By Hudson Sangree
SACRAMENTO, Calif. — Could PG&E’s announcement that it plans to file for bankruptcy Jan. 29 be a ploy? A lawyer representing thousands of wildfire victims said she thinks it’s quite possible.
On the steps of the California state Capitol Tuesday, former state Sen. Noreen Evans, now a plaintiffs’ attorney, said she believes PG&E won’t go through with filing for Chapter 11 reorganization at the end of the month, as it has said it would.
The utility’s move likely is an attempt to get California’s new governor, Gavin Newsom, and lawmakers to intervene, Evans said.
“I think there’s a very huge possibility they won’t file as planned,” Evans said. “It would open a can of worms.”
If PG&E, the state’s largest utility, were to enter bankruptcy, it would call into question billions of dollars in energy contracts and payments to CAISO, among other obligations. (See PG&E Meltdown Could Cost CAISO Members, Generators.)
Evans, whose former district includes areas of Santa Rosa, Calif., devastated by wildfires in 2017, is now part of a legal team representing 4,000 fire victims in the state’s catastrophic blazes during the past two years.
The ex-lawmaker joined famed PG&E foe Erin Brockovich at the Capitol to protest the utility’s alleged efforts to avoid financial liability for the Camp Fire, which killed 86 residents and destroyed the town of Paradise, Calif., in November 2018. The wildfire was by far the deadliest blaze in state history.
Brockovich urged California leaders to do more than have a seat at the table in deciding PG&E’s fate. “Be the head of the table and take control of this runaway monopoly,” she said.
Brockovich gained movie fame after she helped build a case against PG&E in the 1990s for polluting the desert town of Hinkley, Calif., with hexavalent chromium. She has remained one of the utility’s most prominent critics.
Brockovich, Evans and other victim advocates don’t want PG&E to enter bankruptcy because it would put plaintiffs and their lawyers in line for payment behind PG&E’s secured creditors. A bankruptcy judge would parcel out compensation, not jurors.
Investors, too, are arguing against PG&E’s bankruptcy plan. BlueMountain Capital, a major shareholder, sent the utility a second letter this week urging it to postpone filing for bankruptcy protection and arguing bankruptcy is unwarranted. PG&E shareholders would likely lose their investments in a Chapter 11 reorganization.
Evans and other PG&E critics, notably public interest group Consumer Watchdog, have said PG&E’s bankruptcy is a ruse to get state lawmakers to do what they wouldn’t do last year — get PG&E off the hook for billions of dollars in liability.
After the wine country fires of 2017 devastated Napa and Sonoma counties, PG&E lobbied lawmakers to overturn California’s longstanding use of inverse condemnation to hold utilities strictly liable, regardless of negligence, for damage to private property caused by their equipment.
Gov. Jerry Brown sided with PG&E last year because he was worried the giant utility would renege on the billions of dollars it plans to invest in renewable energy. In passing Senate Bill 901 last year, lawmakers didn’t alter inverse condemnation, but they provided a process by which utilities could seek long-term bond financing for wildfire debts. (See California Wildfire Bill Goes to Governor.)
The process, however, didn’t apply to 2018 fires, including the Camp Fire. Lawmakers initially showed interest in amending SB 901 to include last year’s fires but have recently backed off because of public anger against the utility.
Though state officials have yet to determine the cause of the Camp Fire, PG&E has said its transmission line sparked flames near the start of the Camp Fire on the morning it began.
PG&E announced earlier this month it would file for bankruptcy because it faces at least $30 billion in financial exposure for the Camp Fire and wine country fires. Absent state intervention, it said, bankruptcy was its only viable option.