PG&E Corp. has struck a deal with financial firms that tried to take control of the company, but the outcome of its bankruptcy case still hinges on one key figure: Gov. Gavin Newsom, the San Francisco Chronicle reported. The parent company of Pacific Gas and Electric Co. said yesterday that it reached a settlement agreement with a group of bondholders, led by the hedge fund Elliott Management, to resolve a persistent and highly contentious bankruptcy dispute. In exchange for new debt that’s cheaper for PG&E, among other terms, bondholders have agreed to scrap a proposal that would give them a controlling stake in the company. PG&E said the deal would — if approved in court — save its customers about $1 billion. It’s a major milestone for PG&E, which is trying to maintain control over how its nearly yearlong bankruptcy case concludes. Yet further hurdles remain. Chief among them is Newsom, who yesterday renewed his threat to have the state take over PG&E. In court papers objecting to the financing PG&E wants to use to exit bankruptcy, Newsom’s attorneys said the company had “yet to make a single modification” that would address the “many deficiencies” with its plan to resolve the case. Read more.
Some of the most widely discussed ways to prevent the massive fires and blackouts that plague California may also be the most expensive, a Bloomberg News analysis suggests. For instance, burying all 81,000 miles of PG&E Corp.’s electrical distribution lines so they won’t spark blazes during windstorms could cost more than $240 billion, the analysis found. That’s based on a PG&E estimate that moving existing lines underground costs $3 million per mile. A state takeover of the troubled utility would also likely have a hefty price. The book value of PG&E’s electricity assets — the amount they’d cost if new — is $62 billion, according to the analysis. The state would almost certainly negotiate a lower price to account for depreciation, but it would also have to assume PG&E’s liabilities. The analysis underscores the immense challenges California faces as it pushes to end deadly wildfires and the sweeping, deliberate blackouts intended to prevent them. PG&E, the state’s largest utility, filed for chapter 11 last January facing $30 billion in liabilities from the blazes, which have erupted with increasing frequency as climate change fuels hot, dry weather. Read more.
