What happens if California takes over PG&E?

Calling the bankruptcy of California’s largest investor-owned utility a “godsend,” Gov. Gavin Newsom has threatened a public takeover of Pacific Gas & Electric unless it can transform into a provider of affordable, reliable, clean and — above all — safe energy. That means no more ferocious wildfires sparked by PG&E equipment. That means no more fire-season blackouts that drag on for days or weeks, disrupting the state’s $3 trillion economy.

It has been a little over a year since PG&E sought Chapter 11 protection, fearful that it might be locked out of the capital market by mounting wildfire liability and a fire-prone, climate-driven future. Reorganization was intended to give the company breathing room, keep utility workers employed — and keep Northern California’s lights on. 

PG&E hasn’t been without lifelines. Last year, the state created a fund to help utilities deal with the rising risk of wildfires. If PG&E emerges from bankruptcy by June 30, it can qualify for that assistance — something it desperately needs to get out of a hole created by nearly $25 billion in settlements with wildfire victims and insurers. One by one, as the current reorganization has proceeded, most of those victims, along with insurers and bondholders, have signed on to PG&E’s plan, in order to be repaid.

But PG&E also has a long, bitter history with Californians, from the lax maintenance that led to eight deaths in a 2010 San Bruno gas explosion to the groundwater contamination that prompted a class action lawsuit in the 1990s to the role its aging equipment has played in recent wildfires. Only Newsom, speaking for a distrustful public, now stands in the utility’s way.

Newsom has resolved to block the electricity provider unless it overhauls its corporate governance, refocuses on safety and opens itself up to state control if conditions become dangerous. He can do that: PG&E’s reorganization plan requires approval from Newsom’s appointees on the California Public Utilities Commission. 

PG&E has pledged to bring in some new board members and a safety monitor. But the utility wants to keep its corporate structure intact and use stock to pay half of the settlement it owes victims of the fires caused by its equipment, essentially making them shareholders. Meanwhile, tree-trimming it was supposed to do to mitigate future risk remains backlogged. And even under its best-case scenarios, blackouts can be expected for another decade.

So can Newsom force change? And if he does, what might that change look like?

History isn’t on Newsom’s side, but …

Newsom has insisted “there’s gonna be a new company or the state of California takes it over.” But he hasn’t offered any specifics about what a public acquisition would look like – let alone mention that any takeover could cost $60 billion or more, a high price even for a state with an $18 billion rainy day fund. And bankruptcy court may be a difficult venue to do it.

“We haven’t seen the bankruptcy system in recent years used to dramatically alter the structure of a major privately owned public utility,” said Jared Ellias, law professor at UC Hastings. “This is new. There’s not a set of transaction documents sitting on anybody’s shelf.” …

Click here to read the full article from CalMatters.org

Comments

  1. nothing good. can the state run the DMV or High Speed Rail?

  2. The Captive says

    We can’t get rid of Gruesome newsome but he and his gang can get rid of a Utility that is preferred to the newsome gang. — They are indeed the lowest and most corrupt .

  3. Would love to see the Government run a utility company! Since the dysfunctional government has difficulty operating 8 to 5 weekdays, the need to be accountable 24/7 seven days a week to provide continuous uninterruptable electricity, will be a challenge that will fall on its face.

  4. Take it over ? Yes. But only to sell it for one dollar to a Ratepayer owned Co-op.

    I have no doubt we can find some nice folks in Texas to help us run it and they know a little something about operating their own state utility- they’re the only state with it OWN power grid.

    The San Jose mayor has pushed for this. We should start our own ballot initiative to ensure its done right and structured for our best interests.

    • Texans believe in capitalism; Californians believe in Socialism or at least free lunches. That’s why it can’t be done by anyone residing in California. It must be done from outside. Problem is Californians, like cockroaches, will sneak back through the cracks and eventually screw it up.

  5. Newsom’s (democrat) take over talk is nothing more than deflection. California has a growing set of problems that are fast becoming out of control or,for the most part already there. Any serious move by the democrats will end up in a protracted court battle that probably won’t be resolved for years.The democrats are being democrats. Their more concerned with optics than actually solving. It’s the only way they stay relevant…in their minds.

  6. Stan Sexton says

    Just more overpaid and over-pensioned CALPERS employees instead of private-sector workers. More nails in the coffin for taxpayers and more voters for Newsom.

    • Newsome doesn’t know what he is trying to do. It’s just politics for him. He has his aspirations on the White House. It is more difficult see
      scenario, we need to have conservation in our Forest maintenance. We need to have controlled logging who clean forest fire lines and fund more for our state Forestry Service. Build more water storage areas..

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