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PG&E Is Near $13.5 Billion Deal With Wildfire Victims

Mark Chediak and Scott Deveau

(Bloomberg) -- PG&E Corp. is close to finalizing terms for a $13.5 billion payout to victims of wildfires ignited by its power lines, a key step toward resolving the biggest utility bankruptcy in U.S. history, according to people familiar with the matter.

The California-based power giant would pay half in cash and the rest in stock in the newly reorganized utility, the people said, asking not to be identified because the matter is private. The cash portion would be paid with a lump sum upfront, and the remainder would be paid over 18 months, they said. No final agreement has been reached, and the talks could still fall apart.

In a statement, PG&E said it was “committed to satisfying all wildfire claims in full” as required by law and as laid out in its bankruptcy plan. A representative for the wildfire victims declined to comment.

Shares in PG&E rallied Wednesday and were up 22% at $10.42 at 2:54 p.m. in New York.

The company last month proposed $13.5 billion in compensation to the wildfire victims, people with knowledge of the matter said at the time. The two sides were at odds, however, over how to structure the payout and how much should come in the form of cash and stock.

A deal now would be a victory for PG&E, which has spent months trying to negotiate a viable restructuring plan to emerge from bankruptcy by the middle of next year. The utility has already agreed to pay $11 billion to insurers and other wildfire claim holders, and the judge overseeing its bankruptcy is holding a hearing on that settlement Wednesday. The company also has a deal to pay $1 billion to local government agencies.

Catastrophic Wildfires

PG&E filed for Chapter 11 in January after its equipment was blamed for starting catastrophic wildfires in 2017 and 2018, burying it in an estimated $30 billion worth of liabilities.

Compensating victims of wildfires emerged as the largest sticking point in PG&E’s restructuring. The company had initially offered victims $8.4 billion, a fraction of what they said they were owed. California Governor Gavin Newsom had threatened a state takeover if the utility failed to reach a deal with creditors and wildfire victims soon.

The progress toward the deal comes as PG&E is drawing outrage from state lawmakers and residents for carrying out deliberate mass blackouts to keep its power lines from igniting more wildfires during wind storms. In October, it plunged millions of Californians into darkness four times. The backlash increased pressure on Newsom to restructure PG&E and overhaul its governance.

(Adds company statement in third paragraph.)

To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Lynn Doan at ldoan6@bloomberg.net, Joe Ryan, Steven Frank

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