California regulators opened an investigation on Sept. 26 into ratemaking and other implications of Pacific Gas and Electric Co.'s bankruptcy reorganization case.
The Public Utilities Commission initiated the proceeding with the aim of rendering its decision in advance of a June 30, 2020, statutory deadline to allow a federal bankruptcy court to address and approve any modifications made to the plan that follow from the PUC's orders.
On Jan. 29, PG&E Corp. and its utility subsidiary, known as PG&E, filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of California in response to devastating wildfires that occurred in the fall of 2017 and 2018 connected to PG&E-owned infrastructure. The company's liability is expected to be in the tens of billions of dollars. On Sept. 9, the utility and its parent filed a plan of reorganization with the court that outlines how they propose to structure their exit from bankruptcy.
While the bankruptcy court is mostly concerned with the relationship between the debtor and its creditors, the commission regulates the relationship between the utility and its ratepayers. Part of the companies' plan identifies commission approvals needed as a condition for confirmation of the plan. The commission must approve any rate changes called for in a reorganization plan.
The current plan of reorganization has not yet sufficiently advanced through the bankruptcy court for the commission's consideration but could include authorizing PG&E's return on equity and capital structure, approval of PG&E's corporate governance structure and other matters such as those related to safety and state climate goals.
Regulatory approvals also are required for PG&E to become eligible to participate in a wildfire insurance fund established by Assembly Bill 1054, which the state passed this year to pay wildfire damage claims. On Aug. 26 the bankruptcy court authorized PG&E to participate in the fund and to make contributions to the fund.
