CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, FEBRUARY 26, 2019 OR THEREAFTER
FOR RELEASE: TUESDAY, FEBRUARY 26, 2019 OR THEREAFTER
BY THOMAS D. ELIAS
“ANOTHER PHONY-LOOKING PG&E BANKRUPTCY”
It’s no
secret that to many California consumers, this winter’s Chapter 11 bankruptcy
filing by Pacific Gas & Electric Co. looks as phony as a $3 bill.
That’s
because bankruptcy filings are intended to protect companies and individuals
whose financial survival is threatened. There is no evidence this state’s
biggest utility is in such deep trouble right now.
Yes,
PG&E has other kinds of trouble. It was convicted of criminal negligence in
the 2010 San Bruno natural gas pipeline explosion that killed eight persons. A
federal judge supervising the company’s probation in that case accuses the
company of “killing people.” It faces myriad lawsuits claiming it caused much
of the damage done by the massive wildfires of the last two years.
But
with a reported $1.5 billion cash on hand, PG&E is not broke like most
supplicants in bankruptcy court. It collects more than $1 billion every month
from millions of gas and electric consumers. California authorities absolved
the company of most blame for damage in the 2017 Tubbs fire, reducing its
potential lawsuit liability by several billion dollars. Plus, PG&E has an
assured $5 billion in outside financing to get it through any impending tough
times. And so far, not a single 2017 or 2018 wildfire-related lawsuit has been
settled or adjudicated, meaning PG&E’s supposedly massive liabilities right
now are mere theoretical speculation.
It’s
ludicrous for any company to seek relief from all its other debt and possible
release from many contracts just because it might, maybe, possibly lose some
lawsuits.
There’s
also the big utility’s past bankruptcy history: during the energy crunch in the
first years of this century, PG&E suddenly declared itself insolvent, then
emerged as a stronger company without divesting anything but debts, stiffing
some creditors. Rates to consumers rose steeply, while executives cleared more
than $80 million in bonuses for their actions during that bankruptcy.
All
this explains why today’s PG&E bankruptcy filing drew criticism the moment
it was announced.
PG&E,
of course, claims it is blameless. Never mind that no executive has ever been
punished for the San Bruno disaster. Never mind that the corporate board of
directors has not suffered for any of this. Never mind that PG&E customers
paid many billions of dollars for gas and electric line repairs and maintenance
over more than 65 years before San Bruno, with the company and its regulators
at the state Public Utilities Commission unable or unwilling to say where much
of the money went.
The
bottom line here is that there is no bottom line. No one knows how much
PG&E might eventually pay in wildfire lawsuit settlements, even though the
company says its liabilities might top $30 billion.
The
Tubbs Fire ruling, however, means many lawsuits might not get far. At this
point, while PG&E lines are suspected of sparking the ultra-disastrous Camp
Fire in Butte County, which destroyed most of the town of Paradise and much
more, there is so far no official finding of blame.
So why
should PG&E be allowed to enter bankruptcy while it has cash on hand, more
arriving daily and still more available, with no real idea how much it may owe
in damages? Especially when the company listed far more in assets than
liabilities in its filing, $71 billion in assets against $52 billion in actual
and potential debt.
This
company is not broke, but would like to evade whatever its wildfire liabilities
might turn out to be; bankruptcy will at least delay related lawsuits. PG&E
also might want to ditch expensive electricity contracts signed during the
energy crunch and later on under California’s renewable energy campaign. Some
of those deals see PG&E import solar and wind energy to its service area
from far away.
Critics
like Democratic state Sen. Bill Dodd of Napa say they’re “disappointed” by the bankruptcy, calling for “change at PG&E in both its
leadership and corporate culture.”
For
sure, bankruptcy will harm shareholders who depend on PG&E stock dividends
for income and wildfire victims who blame the company. Customers also could
face higher rates.
But
phony or not, no one yet has even tried seriously to stop this bankruptcy and
its far-reaching potential harm to Californians.
-30-
Email Thomas Elias at
tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising
Cancer Treatment and the Government’s Campaign to Squelch It," is now
available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net
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