Published: Tue, January 15, 2019
Business | By Pearl Harrison

California utility PG&E replaces CEO amid bankruptcy worries

California utility PG&E replaces CEO amid bankruptcy worries

USA utility Pacific Gas and Electric Company (PG&E) disclosed on Monday that it will file for bankruptcy. The firm is facing billions of dollars in claims after being blamed for sparking numerous wildfires, including 2018's Camp Fire - the state's deadliest on record.

"While we are making progress as a company in safety and other areas, the Board recognizes the tremendous challenges PG&E continues to face", Kelly said.

Shares of the company dropped almost 50 percent in early trading Monday, one day after the company said Chief Executive Geisha Williams was stepping down.

Last month, California Attorney General Xavier Becerra said the company could be prosecuted for murder if it acted with malice in the operation and maintenance of its equipment. The board concluded that a Chapter 11 reorganization "is ultimately the only viable option to restore PG&E's financial stability", according to the filing. The utility went through a reorganization from 2001 to 2004, which resulted in a settlement that was estimated to cost the average customer anywhere from $1,300 to $1,700, according to the Los Angeles Times.

Moody's and S&P both recently cut PG&E's credit rating deeper into junk territory, citing concerns that the company required dramatic government intervention to shore up its finances. The utility faces dozens of lawsuits from people who lost loved ones and property in the fires, and under a legal standard known as "inverse condemnation", utilities in California are held liable for damages caused by fires started by their equipment, even if they are found to be safely and legally operating that equipment.

In the press release sent out regarding the bankruptcy, PG&E also stated that it "remains committed to assisting the communities affected by wildfires in Northern California, and its restoration and rebuilding efforts will continue". Here, transmission towers in a valley near Paradise, Calif., as the Camp Fire burns in November 2017.

The company said it will be able to gain access to capital and resources it needs to continue providing service to customers as it restructures.

However, it added it was "not going out of business", and said it did not expect any impact on gas or electricity services for its customers.

California Gov. Gavin Newsom said in a statement to KTVU the company should continue to "honor promises made to energy suppliers and to our community". PG&E said it expects the Chapter 11 process to "support the orderly, fair and expeditious resolution of its potential liabilities" from the California wildfires.

PG&E said an employee discovered a damaged power line near the source of the Camp Fire immediately before the massive blaze broke out. The California Public Utilities Commission is considering breaking up the power company.

Last week, a federal judge proposed requiring PG&E to re-inspect its entire electric grid and "remove or trim all trees that could fall onto its power lines".

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