PCG PG&E Corporation

By Peg Brickley 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 20, 2019).

A push for an official voice for ratepayers in PG&E Corp.'s bankruptcy case is gaining momentum as California's largest utility confronts the fallout from years of wildfires linked to its equipment.

The Utility Reform Network, or Turn, is asking for a seat at the bargaining table for customers as PG&E negotiates with investors and wildfire victims over its future.

Ratepayers want to make sure they don't have to pay the price for PG&E's safety failures, said Turn Executive Director Mark Toney in an interview. Backed by representatives of big utility customers and the Public Advocate's Office of the California Public Utilities Commission, the nonprofit is campaigning for the appointment of an official committee in PG&E's bankruptcy case.

"We want to protect the ratepayers' interests as creditors," said Mr. Toney.

PG&E filed for chapter 11 protection at the end of January, after being hit with claims for an estimated $30 billion in damage from wildfires. PG&E hasn't responded to the request for a ratepayer committee, which came in a series of filings in the U.S. Bankruptcy Court in San Francisco.

California Gov. Gavin Newsom has suggested a state fund be created to cushion utilities against the shock of wildfire damages, exciting both shareholders and bondholders.

Ultimately, someone will have to pay, either shareholders or ratepayers, for such a fund, which is being talked about as a fund of $15 billion or more, according to a recent report from Moody's Investors Service.

"If the fund is financed through higher rates, the burden would be borne by customers," Moody's analysts warned.

The lawsuits that pushed PG&E into bankruptcy blame lax safety practices for the wildfires, but the utility's plight has spurred discussions of the role of climate change in the risks faced by energy companies.

Southern California Edison this month asked the Federal Energy Regulatory Commission to adjust its return on equity to account for "extraordinary" wildfire risk, citing uncertainty about how utilities would recover the costs stemming from escalated chances of fire.

This is PG&E's second trip through bankruptcy. In the first chapter 11 proceeding, which began in April 2001, PG&E convinced U.S. District Judge Dennis Montali to disband a ratepayers committee that had been appointed by federal bankruptcy watchdogs. Judge Montali is also presiding over the new case.

In the new case, there are official committees representing creditors and for people with damage claims from the fires. The committee representing bondholders and trade creditors has asked court permission to hire a lobbying firm, to advance the agenda of financial creditors before governmental bodies, in addition to its lawyers and other advisers.

"This is not a slam dunk by any means," Mr. Toney said. However, Turn and allied ratepayer groups decided to try for a voice in bankruptcy court because so much is at stake, he said.

"We want to make sure that ratepayers don't get hosed as we did in the last settlement," he said. "All creditors got 100 cents on the dollar at the expense of ratepayers being soaked for approximately $7 billion."

Write to Peg Brickley at peg.brickley@wsj.com

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April 20, 2019 02:47 ET (06:47 GMT)

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