Pacific Gas and Electric has until Tuesday to submit another revised restructuring plan to emerge from bankruptcy after what the Sacramento Bee calls a "stunning rebuke" by Governor Gavin Newsom.
Newsom penned a letter to PG&E CEO Bill Johnson on Friday saying that his office had "undertaken a review" of the amended bankruptcy plans submitted by the utility, and found that the plans "do not result in a reorganized company positioned to provide safe, reliable and affordable service to its customers." Further he said that the "Amended plan falls woefully short on the requirements of AB 1054," referring to Assembly Bill 1054, adopted in July, which dictates how utilities must pay into a state fund and then qualify for liability coverage for future wildfires.
"To be approved under AB 1054, any plan of reorganization must position the emerging new entity for transformation," Newsom writes. "Such plan should include stringent governance and management requirements, enforcement mechanisms, and a capital structure that allows the company to make critical safety investments."
In addition to a "more qualified and independent board of directors," Newsom is calling for the company to establish a "more stable, flexible" capital structure. He says that the one currently proposed "would not compare favorably" to those of PG&E's peers in the industry.
As NPR reports, Newsom's rejection of the company's amended bankruptcy plan came at the end of a week in which things were looking up, relatively speaking, for the troubled utility. PG&E reached a tentative $13.5 billion settlement last week with victims of multiple wildfires — a deal that was seen as bringing the company closer to resolving its bankruptcy in time for a June 30 deadline that will allow it to draw on state wildfire liability funds.
Newsom's approval of PG&E's bankruptcy plans is not legally binding, as the Los Angeles Times notes. But the company had sought out Newsom's blessing last week in a political gamble following the announcement of the victims' settlement. It now seems as though PG&E's future as a for-profit enterprise could be in doubt — unless Newsom's letter amounts more to grandstanding for political gain.
PG&E's stock rallied last week on news of the tentative settlement, but as the Chronicle reports, it's fallen 14 percent so far on Monday following Newsom's rebuke.
Regulators with California Public Utilities Commission will still have to do an extensive review of PG&E's restructuring and sign off on it next year before the company can move forward.
Previously: PG&E Reaches $13.5 Billion Settlement for Victims of Wildfires, Ghost Ship Fire