By Hudson Sangree
SACRAMENTO, Calif. — Gov. Gavin Newsom said Friday he has summoned Pacific Gas and Electric and its creditors, including wildfire victims, to the State Capitol this week to try to broker a deal to pull the utility out of bankruptcy more quickly.
Newsom said the negotiations will include a professional mediator appointed last week by the judge overseeing PG&E’s Chapter 11 reorganization in U.S. Bankruptcy Court in San Francisco. (See PG&E Bankruptcy Judge Appoints Mediator.) The utility filed for bankruptcy early this year after being blamed for last year’s Camp Fire, the deadliest and most costly wildfire in California history, as well as a series of catastrophic fires in California’s wine country in 2017.
PG&E needs to exit bankruptcy by June 30, 2020, if it wants to participate in a $21 billion wildfire insurance fund established by AB 1054, a bill Newsom pushed through this summer. (See Calif. Lawmakers Rush to Pass Utility Wildfire Aid.)
The governor said his backup plan is for the state to reorganize PG&E, possibly with an “ISO-like structure” akin to CAISO, a public-benefit corporation with leaders appointed by the governor and confirmed by the State Senate.
“If the parties fail to reach an agreement quickly to begin this process of transformation, the state will not hesitate to step in and restructure the utility,” Newsom said in a statement.
Newsom reiterated his threat in an hourlong press conference, broadcast on Twitter, at which he studiously avoided using the word “takeover” but often stopped just short of it. He provided no specific timeline for when the parties to the bankruptcy must come to an agreement before the state would intervene with its plan.
The governor appointed a team to deal with the PG&E situation that will be led by his cabinet secretary, Ana Matosantos, whom he called the state’s new “energy czar.”
He announced his strategy after a week of touring wildfires burning in Northern and Southern California. The active blazes include the Kincade Fire, in Sonoma County, which may have been sparked by a broken PG&E transmission line. (See PG&E Stock Plummets amid Wildfires, Shutoffs.)
The utility blacked out more than 2 million residents twice in the past two weeks to try to prevent wildfires as part of its public safety power shutoff (PSPS) program. In some cases, residents were without power for seven days.
Newsom insisted such widespread, long-lasting power shutoffs could not be the state’s “new normal.” The state will review the PSPS policies established in SB 901, a major wildfire bill that then-Gov. Jerry Brown signed in September 2018.
The California Public Utilities Commission has started a formal inquiry into PG&E’s power shutoffs.