SAN FRANCISCO (AP) — Pacific Gas and Electric will be able to avoid two legal obstacles that could have tripped up its efforts to bounce back from bankruptcy if California Gov. Gavin Newsom and a federal judge approve a $13.5 billion settlement with victims of catastrophic fires blamed on the utility’s equipment.
The company provided a clearer picture of its remaining bankruptcy path in a Monday regulatory filing that provided more details about the deal.
The settlement will allow Pacific Gas and Electric to skip a January civil trial to determine whether the company was liable for a 2017 Northern California wine country fire that killed 22. It also would cancel plans for a federal court hearing that was supposed to estimate the company’s total bill for all the fires tied to its power systems from 2015 through 2018.
Facing potential damages of up to $30 billion, PG&E filed for bankruptcy last January.
If a judge had deemed the liabilities much higher in a trial, Pacific Gas and Electric could have been rendered insolvent — a result that would have blown up its plan to reorganize its finances and resume normal business operations after emerging from bankruptcy protection next summer.
“This is exciting news for PG&E. They didn’t want to have anything to do with going before a jury,” said Jared Ellias, a professor with the University of California Hastings College of the Law who has been closely following the utility’s bankruptcy case.
Investors also seemed relieved. PG&E’s stock climbed nearly 16% Monday to close at $11.18.
For now, both the state and federal court hearings are on hold and are supposed to be shelved entirely, as long as the settlement with the fire victims gets the required approvals within the next two weeks.
Newsom has until this Friday to sign off on the settlement, which meets his demands to substantially raise the $7.5 billion that Pacific Gas and Electric had previously earmarked for fire victims. U.S. Bankruptcy Court Judge Dennis Montali has until Dec. 20.