It’s official: Pacific Gas & Electric has filed for bankruptcy protection.
The company announced the formal filing on Tuesday morning. It was filed in the United States Bankruptcy Court for the Northern District of California.
“Our most important responsibility is and must be safety, and that remains our focus. Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires. We also intend to work together with our customers, employees and other stakeholders to create a more sustainable foundation for the delivery of safe, reliable and affordable service in the years ahead,” said John R. Simon, the interim CEO of PG&E.
The bankruptcy protection filing is not unexpected as the company announced two weeks ago its intention to file because of the potential of billions of dollars in liability as a result of deadly and destructive wildfires across the state in the past two years.
The company could be implicated in many of the fires, including the Camp Fire, which was the deadliest in the state’s history. The fire almost completely destroyed the town of Paradise and left 88 people dead. Though it has yet to be officially determined if PG&E was responsible for the fire, some indications are a faulty circuit was brought to the attention of company officials at about the same time the fire started.
In other cases, the company’s practices have been identified as the cause of the fires.
Simon, in a press release, said the company is aware of the safety issues and that’s one of the reasons they are filing for bankruptcy protection.
“To be clear, we have heard the calls for change and we are determined to take action throughout this process to build the energy system our customers want and deserve,” said Simon.
In conjunction with the filings, PG&E also filed a motion seeking interim and final approval of the court to enter into an agreement for $5.5 billion in debtor-in-possession (DIP) financing with J.P. Morgan, Bank of America, Barclays, Citi, BNP Paribas, Credit Suisse, Goldman Sachs, MUFG Union Bank and Wells Fargo acting as joint lead arrangers.
PG&E expects the court to act on an interim basis on the DIP motion in the coming days. The DIP financing, when approved, will provide PG&E with necessary capital to ensure essential maintenance and continued investments in safety and reliability for the expected duration of the Chapter 11 cases.
The company said in the court filing it had about $1.5 billion in cash and cash equivalents on hand.
“Through this process, we will prioritize what matters most to our customers and the communities we serve – safety and reliability. We believe that this process will make sure that we have sufficient liquidity to serve our customers and support our operations and obligations,” Simon said.
As part of the filings, PG&E also filed various motions with the court in support of its reorganization, including requesting authorization to continue paying employee wages and providing healthcare and other benefits. In the filings, PG&E also asked for authority to continue existing customer programs, including low income support, energy efficiency and other programs supporting customer adoption of clean energy.
PG&E officials said they expect the court to act on these requests in the coming days. PG&E also intends to pay suppliers in full under normal terms for goods and services provided on or after the filing date of Jan. 29.
What might happen next remains to be determined, though some have speculated PG&E might sell off its gas division. How that would impact employees and other matters remains to be seen.
PG&E announced in the press release the company has hired two “restructuring” officials, both from AlixPartners, LLC. That company will assist PG&E with the reorganization process and related activities.