PG&E has obtained billions in financing so the cash-strapped company can provide power safely during its pending bankruptcy — a potentially byzantine insolvency that could take two years to resolve in the wake of a series of deadly wildfires in Northern California — the embattled utility said Tuesday.
JPMorgan Chase Bank, Bank of America, Barclays Bank and Citigroup Global Markets have teamed up to provide PG&E with $5.5 billion in what is called “debtor-in-possession financing” that assures PG&E can provide electricity and gas services while its bankruptcy case pushes ahead.
“PG&E currently expects the Chapter 11 cases to take, subject to satisfaction of certain terms and conditions, approximately two years,” the utility said Tuesday in a filing with the Securities and Exchange Commission.
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However, the lending package also allows for PG&E to extend the financing for an additional year should it be necessary to extend the bankruptcy proceeding beyond the anticipated two years.
San Francisco-based PG&E has tottered to the brink of bankruptcy because the company must confront a mountain of liabilities and debts, totaling as much as $30 billion by some estimates, that have arisen from lethal and disastrous wildfires of 2017 and 2018 in Northern California.
State fire investigators have determined that PG&E’s equipment and facilities were the cause of 17 deadly infernos in the North Bay Wine Country and nearby regions in October 2017.
Separately, PG&E has revealed that it suffered equipment failures in the origin area of a catastrophic and fatal wildfire in November 2018 that scorched Butte County and essentially destroyed the town of Paradise.
The company hopes to reorganize the finances and restructure the debts of the utility and the holding company that owns the utility’s gas and electricity operations through a Chapter 11 bankruptcy proceeding.
The bankruptcy filing is expected to occur sometime around Jan. 29, PG&E stated.
In 2001, PG&E filed for bankruptcy primarily because the utility subsidiary was whipsawed financially due to manipulation by wholesalers of the energy markets.
The state Public Utilities Commission at that time, as part of its responsibility to approve the settlement of the 2001 bankruptcy case, quietly orchestrated a deal that saddled PG&E customers with average increases in electricity rates that ranged from $1,300 to $1,700 over a 10-year period.
The PUC would again have to sign off on any deal bankruptcy court deals this time.
It’s uncertain whether the PUC would grant PG&E with a financial path made smoother by sharply higher customer bills this time around. The PUC is investigating allegations that PG&E falsified records involving its gas pipeline system and operations from 2012 through 2017.
“Utility falsification of safety related records is a serious violation of law and diminishes our trust in the utility’s reports on their progress,” PUC president Michael Picker said in December.
In 2010, PG&E was responsible for a gas explosion that killed eight and destroyed a San Bruno neighborhood. Federal investigators subsequently determined that disaster arose from a lethal combination of PG&E’s flawed record keeping, shoddy maintenance and the PUC’s lazy supervision of PG&E.
A federal jury in 2016 convicted PG&E of felonies and crimes the company committed before and after the San Bruno blast.
“PG&E expects that the (financing) will provide it with sufficient liquidity to fund its ongoing operations, including its ability to provide safe service to customers during the Chapter 11 cases,” PG&E stated in the SEC filing.