UPDATE: Judge Approves Billions For PG&E Settlements, Firm Says Bankruptcy Milestone Reached

A federal bankruptcy judge in San Francisco on Tuesday approved two settlements totaling $24.5 billion between PG&E and victims of 2017 and 2018 North Bay wildfires caused by electrical equipment failures.

The agreements approved by U.S. Bankruptcy Judge Dennis Montali include $13.5 billion for fire victims, including survivors of dozens of people who died in the fires and others who lost their homes, and $11 billion for insurance companies that have already paid claims.

Montali announced his decision at the end of a daylong hearing, saying, “There are tens of thousands of people who just want to go about their lives.”

Lawyers said during the hearing that there are 70,000 claims pending against the San Francisco-based utility.

The approvals enable PG&E to continue with a proposed financial reorganization plan to exit bankruptcy court. The utility is seeking to emerge from Chapter 11 bankruptcy by a June 30 deadline to be eligible for a
new fund established by the state Legislature to cushion utilities’ liability for future wildfire claims.

PG&E filed in January for the Chapter 11 bankruptcy protection, which enabled it to freeze its debts and proceedings in lawsuits while developing a financial plan.

It said in a statement Tuesday, “Today marks an important milestone — the bankruptcy court has approved our settlement agreements resolving all major wildfire claims. This brings us one significant step closer to getting victims paid so they can rebuild their lives.

“As for our overall plan of reorganization, we remain engaged in active and constructive dialogue with stakeholders,” PG&E said.

Montali said a group of PG&E bondholders remains free to advocate a competing financial plan. That plan also includes a similar $13.5 billion for victims for losses not compensated by insurance companies.

The settlement between PG&E and lawyers for wildfire victims originally included a provision that Gov. Gavin Newsom must find that PG&E’s reorganization proposal meets the requirements of AB 1054, the law that created the wildfire fund.

But on Friday, Newsom announced he believes the plan lacks the management and financial changes needed to provide “safe, reliable, and affordable service.”

On the eve of Tuesday’s hearing, PG&E and lawyers for the victims filed a settlement amendment withdrawing the requirement that Newsom must approve the reorganization plan.

Frank Pitre, a fire victims’ lawyer who argued in favor of the settlement, told Montali Tuesday that Brown’s disapproval and the jeopardy to the settlement “reopened all the wounds” for the victims.

“They thought they had a deal, then they didn’t have a deal,” he said.

Settlement approval would “finally give these folks some kind of confidence that there is light at the end of the tunnel,” he said.

Also on Tuesday, Montali ruled that families of victims of the 2016 Ghost Ship fire at an Oakland warehouse, in which 36 people died, could go ahead with civil lawsuits in Alameda County Superior Court against PG&E and other defendants including the city of Oakland and the building owners.

The trial is set to begin on May 26 on 53 wrongful death and personal injury lawsuits, including lawsuits by the families of 33 people killed in the fire.

PG&E spokeswoman Kristi Jourdan said PG&E has not accepted liability for either the Ghost Ship fire or the 2017 Tubbs Fire in Sonoma and Napa County, in which 22 people died, but said that “claims related to those fires will be resolved as part of this settlement.”

“We’ve seen no evidence to date that would lead us to believe that our facilities were the cause of the Ghost Ship fire,” she said.

Cal Fire has concluded that the Tubbs Fire was caused by a faulty private electrical system in Calistoga, but a group of fire victims has claimed that PG&E was responsible.

Cal Fire and PG&E have agreed that the most deadly fire, the 2018 Butte County Camp Fire, in which 85 people died, was caused by a broken hook and resulting arcing of electrical wires on a nearly 100-year-old
transmission tower in eastern Butte County.

In another development on Tuesday, the California Public Utilities Commission staff announced a proposed $1.675 billion settlement with PG&E over the 2017 wildfires and the Camp Fire.

Under the settlement, which must be approved by the commission after review by an administrative law judge, the utility would be barred from obtaining $1.625 billion for wildfire-related costs through increased fees to customers, and would contribute $50 million for system enhancements and public outreach.

The agreement covers costs related to the 2017 wildfires in Butte, Calaveras, Lake, Mendocino, Napa, Nevada, Sonoma, and Yuba counties as well as the 2018 Camp Fire.