Pacific Gas & Electric, the largest utility company in California, announced Monday it plans to file for bankruptcy as it faces an estimated $30 billion in liabilities, potential criminal charges, and possible intervention by regulators after a flurry of deadly and destructive wildfires sparked across the state.
That means hundreds of lawsuits related to the company's role in sparking wildfires could be rolled into one bankruptcy proceeding, putting them on hold for now and potentially limiting payouts to victims. PG&E equipment is being investigated as the cause of 2018's Camp Fire, which killed 86 people and was considered the costliest disaster of the year worldwide. State investigators have already determined the utility company's equipment started the 2017 wildfires in Northern California's wine country, which burned thousands of acres and destroyed hundreds of structures.
The company must notify the public at least 15 days ahead of any bankruptcy filing under state law, and Monday's news prompted its stock price to drop by half. California Gov. Gavin Newsom said all options would remain on the table over the next several weeks, and that while he hoped the state could work with the company, his administration would be cautious.
"PG&E, with respect, has not been a trusted player in the past," the governor told reporters on Monday. "They have admitted knowingly misleading regulators in the past, the very recent past."
The utility company was found guilty of violating federal safety rules for its gas lines ahead of a 2010 explosion in the San Francisco suburb of San Bruno that killed eight people. PG&E is still on federal probation for those crimes, and in a court filing last month, the state's attorney general said if investigators found the company acted recklessly in operating its power lines, it could face more charges. Depending on the severity of any negligence, PG&E could be charged with crimes including murder.
The utility previously filed for bankruptcy in 2001, when California was in an energy crisis. Newsom said this time around he's not concerned about PG&E's ability to provide gas and electricity to its customers, who include about 40% of households and businesses in the state.
"We are not in a position where we’re worried that the lights are turning out," Newsom said.
But big questions remain about whether electricity and gas will remain affordable and whether service can continue with safety and reliability during the hot and dry winds that create the risk of wildfire in California.
In a statement, PG&E defended its response to extreme weather conditions and maintaining its power poles and lines.
"Years of drought, extreme heat and 129 million dead trees have created a 'new normal' for our state, and we must continue to adapt to meet these challenges," PG&E said.
And the company added that California law placed a unique burden on utility companies, which are responsible for all damage their equipment causes — even when the company is following safety rules.
Last month, protesters gathered outside PG&E's San Francisco headquarters, opposing any state "bailout" of the utility and demanding the company compensate victims. Among other claims, the utility is facing 700 lawsuits related to the 2017 wildfires and 50 related to 2018's Camp Fire — with more likely to be filed. Together, PG&E estimates that it could be held responsible for $30 billion in damages, and that's not counting any fines or penalties.
The turmoil has led to the resignation of some company leaders, including CEO Geisha Williams. Newsom and other politicians are also calling for changes to the company's board of directors.
“I’m disappointed that PG&E's hubris and mismanagement have led to this unfortunate point,” California state Sen. Bill Dodd, a Democrat whose district includes parts of Napa and Sonoma counties. “While the CEO has resigned, there must be further change on the board of directors. Now, the Public Utility Commission’s priority must be to protect ratepayers and residents. And above all, PG&E must be held to safety mandates.”