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Monday February 24th, 2020 7:53PM

California governor wants to grill PG&E about financing plan

By The Associated Press

SAN FRANCISCO (AP) — Pacific Gas & Electric's plan to emerge from bankruptcy faced another threat from California Gov. Gavin Newsom during a Tuesday court hearing that set the stage for a potentially dramatic showdown later this month.

Newsom's lawyers told U.S. Bankruptcy Judge Dennis Montali they want to grill PG&E about the company's plans to borrow billions of dollars and sell more stock to help pay the $13.5 billion owed to more than 75,000 victims of catastrophic wildfires ignited by the utility's equipment and negligence.

Montali reaffirmed the terms of the settlement earlier in the hearing, despite a passionate plea from one victim who wanted changes to be made. PG&E also is raising money to pay another $12 billion for insurers and government agencies that suffered losses during a series of deadly fires in 2017 and 2018.

The judge asked lawyers for Newsom and PG&E to to work out out a timetable for the looming battle over the company's financing plan. The face-off could come in court hearings scheduled for Feb. 19 and Feb. 26 or in sworn depositions.

Newsom holds unusual leverage over PG&E because it needs state approval to be covered by a $20 billion wildfire insurance fund the state Legislature approved. Accessing the fund is part of PG&E's bankruptcy reorganization, forcing it to find a way to placate the governor by a June 30 deadline.

The unexpected twist Tuesday marks the latest sign of ongoing tensions between PG&E and Newsom. The Democratic governor has threatened to engineer a government takeover attempt of the nation's largest utility unless it replaces its entire board of directors and lessens its debt load when it exits bankruptcy.

Newsom has insisted that PG&E bring in new leadership to lessen the chances it repeats the bad decisions that led to devastating wildfires and deliberate blackouts affecting 2 million people last fall. Newsom also wants to ensure PG&E has the financial flexibility to pay for an estimated $40 billion to $50 billion in badly needed improvements to its outdated electrical grid.

PG&E has pledged to replace at least some of the 14 people currently on its board as part of its efforts to appease Newsom. But Tuesday's push to question PG&E about its financing plan shows the governor still has serious qualms of what the utility is trying to do.

Montali on Tuesday also rejected a plea to overturn a $13.5 settlement with wildfire victims approved two months ago.

Will Abrams, a Sonoma County resident who lost his home in a 2107 fire, argued the complex settlement is being forced upon confused and still-distressed victims as they try to rebuild their lives. He called for “more sunlight on the process, more sunlight on the information.”

Cecily Dumas, an attorney for wildfire victims who helped negotiate the settlement, assured the judge that a clear explanation on how the $13.5 billion trust will be handled will be filed by a Feb. 21 deadline. The judge already has been passing along to the attorneys letters of protest from people who lost family members, homes and businesses in the wildfires.

“We are taking every one of the letters very seriously," said Dumas.

Language in the settlement indicates the lawyers must try to get victims to vote in favor of PG&E's plan, but Dumas and other attorneys for wildfire victims said they have discretion to tell their clients to reject the terms. Victims are supposed to have their say when voting on PG&E's plan begins next month.

Montali said he had no reason to doubt the lawyers who have reassured him the $13.5 billion settlement is the best deal possible for wildfire victims, many of whom are eager to get their share of the money as soon as possible.

“If they are pulling a fast one on me, they are succeeding," the judge told Abrams.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Corporate News, AP Business - Industries, AP Business - Utilities
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