After deadly wildfires, PG&E bankruptcy promises crumble – CBS San Francisco
SANTA ROSA (AP) – The country’s largest utility company has long been committed to changing its reckless ways. After leaving a trail of death and destruction across northern California from the wildfires started by his equipment, Pacific Gas & Electric’s fifth CEO in less than three years is once again committed to the future becomes “easier” and “brighter”.
But those promises made by CEO Patricia “Patti” Poppe in her first letter to shareholders ring hollow a year after PG&E emerged from one of the most complex bankruptcy cases in US history, an act of desperation sparked by a succession of devastating forest fires ignited by its long neglected power grid.
The bankruptcy, PG&E’s second in less than 20 years, was touted as an opportunity for a utility that provides electricity to 16 million people – a larger population than any state except ‘a handful of states – to finally press the reset button.
So far, however, it felt more like a reminder of the issues that have led to tragedy after tragedy over the past six years, including a wildfire in 2018 that killed 85 people and destroyed the town of Paradise, at about 170 miles (274 kilometers) northeast of San Francisco.
Already a twice convicted felon, PG&E has been charged with another round of fire-related crimes which he denies committing. The utility has also been reprimanded by California regulators and a federal judge overseeing its criminal probation for breaking promises to reduce the dangers posed by trees near its power lines.
And most of the roughly 70,000 victims who have filed complaints of devastation caused by PG&E’s past wrongdoing are still awaiting payment from a $ 13.5 billion trust created in the bankruptcy. The trust faces a shortfall of nearly $ 2 billion as half of its funding came from shares in the company, despite critics claiming it was unwise to own a stake in a utility with a record. also mediocre.
These stocks sagged in a booming stock market. There could still be a windfall if PG&E stocks rebounded, as several analysts predicted, but confidence would find itself in an even deeper hole if the stock were to fall further.
There are legitimate concerns that stocks will fall if the utility starts another deadly wildfire in the next four months, with most of PG&E’s sprawling service territory mired in extreme drought and climate change contributing to it. worsening fire conditions in the western United States.
“Of course I’m nervous. My biggest fear is what will happen to the action, ”said John Trotter, head of the Wildfire Victims Trust, which owns nearly one in four shares of PG&E – far more than any other investor.
Trotter, a retired federal judge who is paid $ 1,500 an hour as a trustee, also has other headaches. He and more than 300 workers have come under heavy criticism for slow payments to victims who lost their families, homes and other property nearly three to six years ago.
In its first six months of operation last year, the trust distributed only $ 7.2 million to victims while racking up nearly $ 39 million in operating expenses, reducing the amount available to pay, according to his financial records.
“I look at it like a locomotive, starting slowly, but we are pulling steam now and we are starting to roll now,” Trotter told The Associated Press in an interview. “I just wish I had a magic wand and could make it go faster, but I can’t.” We are doing all we can.
Trotter said he has a plan to eventually sell the stock without paying taxes on potential earnings, but will not disclose his target price. Shares, which recently hovered around $ 10, will need to rise to around $ 14 per share for the trust to hit $ 13.5 billion.
Wall Street analysts predict that PG&E stock could reach $ 13 to $ 17 over the next 12 months, which would mark a dramatic turnaround. Stocks have fallen 17% so far this year, while the S&P 500 has climbed 14%.
The trust has made progress. As of June 30, it had paid out $ 436.4 million. This is still only 3.2% of the $ 13.5 billion that was supposed to be earmarked for fire victims, a sign of “designed dysfunction” built into utility bankruptcy settlements, said Will Abrams, a victim of the fires. a forest fire caused by PG&E that terrorized his hometown. of Santa Rosa in 2017.
“I was really disappointed,” Abrams said. “Bankruptcy was sold as something to hold PG&E to account, and it wasn’t. Bankruptcy is not a reorganization process. It is a process of dividing the dollars.
But nearly 45,000 victims voted for the plan, with just 6,109 against, according to court documents, paving the way for its approval by US bankruptcy judge Dennis Montali.
Many victims were influenced by the lawyers who participated in the settlement negotiations and argued that the plan was the best option. Eight of those lawyers are now on a nine-person Victims Trust Watch Committee, an arrangement that Abrams says is a conflict of interest.
Amy Bach, the only member of the trust’s oversight committee who was not involved in the PG&E bankruptcy negotiations, insists that everyone is trying to ensure that all victims of the wildfires receive as much money as possible as quickly as possible. The lawyers involved are motivated to make this happen, she said, because their fees depend on paying their clients.
“We have kept as much pressure as possible on the complaints review team,” said Bach, executive director of United Policyholders, a non-profit group she formed almost 30 years ago to fight against insurers on behalf of fire victims. “They seem to hear us, it feels like things are speeding up.”
Frank Pitre, another member of the watchdog and one of the lawyers who represented the fire victims, admitted that things were moving more slowly than he had hoped. This is one of the reasons he gives Trotter and his team a ‘B’ rating for their efforts so far.
“There is a lot of room for improvement,” said Pitre, but added that “there is no doubt in my mind that the effort is there.”
PG&E believes it has already done its part to help the victims of the fires.
“We have funded the trust in accordance with our reorganization plan,” the utility said in a statement to the AP. “PG&E is not involved in the distribution of trust funds.”
Sumeet Singh, Risk Manager at PG&E, listed a wide range of improvements that include the use of more advanced technologies to avoid starting wildfires and help detect them faster.
Although PG&E did not live up to expectations, Singh said, “I am very encouraged by new leadership, (a) new playbook, rigor and discipline that we are on the right track. We know we can do better and we will do better.
Trotter, meanwhile, holds his breath as the weather warms and the northern California landscape dries up.
“We are dealing with the hand that has been given to us,” Trotter said. “(PG&E) says the right things. Now we just have to see if they are doing the right things.
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