The wildfires that ravaged California in 2015, 2017 and 2018 caused an extraordinary amount of damage. Because they resulted from improperly maintained power lines belonging to Pacific Gas & Electric, the company holds the liability to all those affected by these fires. This led to PG&E suffering serious financial hardships and filing for bankruptcy protection.
The bankruptcy case is causing some issues for PG&E due to the looming deadline. According to the Daily Herald, PG&E must complete its bankruptcy plan by June 30, 2020, to qualify for wildlife insurance coverage from the state that would offer protection for future wildfires caused by old power lines. The company needs such insurance to prevent a situation like the current one from ever happening again, but trying to reach a settlement with victims and relief organizations to finalize its bankruptcy plan has not been easy.
The victims’ fund
The biggest issue has been a victims’ fund, which is $13.5 billion. Victims have never felt this was an adequate amount, but PG&E says it is all it can afford. Victims’ lawyers estimate the true cost to be more around $36 billion.
With the victims’ fund already considered inadequate to cover claims, it only added to the issues when disaster-relief agencies wanted up to $4 billion of the fund for their costs associated with the fires.
To help protect the victims’ fund, PG&E settled with the disaster-relief agencies for $1 billion in funds. This agreement is a huge step forward in the company’s bankruptcy and in the push to protect the victims’ fund. It will help ensure that the victims get paid first. Any remaining funds go to the disaster-relief agencies.
The settlement is far from perfect. The chances are high that the disaster-relief agencies will not get any money. However, the Federal Emergency Management Agency has agreed to consider the debt paid in full even if it does not receive money. The major downside is that clean-up costs are likely to fall to the taxpayers.
Also, victims are not likely to see full claim payment. This may lead to new issues as victims may have the chance to vote on the approval of PG&E’s bankruptcy plan. Some say they will vote against it in a push for more money in the victim’s fund.