The state will buy out the company responsible for the largest forest fires if it does not go out of bankruptcy by mid-summer
Pacific Gas & Electric and California Gov. Gavin Newsom have announced that the state will help PG&E exit the financial crisis and bankruptcy, provided that all equipment will be modernized and, thereby, the possibility of new forest fires is minimized.
As part of this deal, it is indicated that Pacific Gas & Electric has agreed to overhaul all substations, power lines and other equipment by June 30, otherwise the state will be able to buy out the company and assume these obligations.
Newsom had previously rejected modernization and repair plans proposed by the company, as they were not fair to those affected by the fire. On Friday, PG&E announced that according to the new deal, they will strengthen control standards during repair work and increase financial investments for the implementation and acceleration of work.
“Through California’s unprecedented intervention in the bankruptcy, we secured a totally transformed board and leadership structure for the company, real accountability tools to ensure safety and reliability and billions more in contributions from shareholders to ensure safety upgrades are achieved,” Newsom said, according to Associated Press.
The current bankruptcy plan involves $ 21 billion in government assistance from the wildfire insurance fund. But these funds will be available only in case of timely completion of work and compliance with the terms of the deal.
Pacific Gas & Electric has been on the verge of bankruptcy for the second time in the past decade. The systematic unwillingness to maintain equipment has led to a series of disasters that have destroyed homes, farms, and claimed hundreds of lives over the past few years.
Last forest fires broke out last fall. The ecosystem of almost the entire state was almost destroyed, millions of animals and hundreds of people died, and the total amount of damage suffered amounted to more than $ 50 billion.
According to the presented reconstruction plan of the company, PG&E intends to invest almost 12 billion dollars in 3 months. This amount includes the money of shareholders and equity of the company, while dividends to shareholders will not be paid for the next three years.
The revised proposal “will position the company to make necessary safety and wildfire mitigation investments in the coming years, partner with the State in achieving its bold climate goals, and, importantly, provide protection to California if the Chapter 11 process is not concluded in a timely manner,” said CEO Bill Johnson.
After the forest fires ceased, Pacific Gas & Electric proposed to settle the claims for lawsuits with money, the total amount of which did not exceed $ 14 billion. Many victims called this proposal unacceptable and demanded full compensation for losses with all the attendant circumstances. U.S. Bankruptcy Judge Dennis Montali sided with the victims and said that she would accept a settlement only after all victims of the cataclysm, which PG&E was responsible for, did not give their consent.