After Lethal Wildfires, PG&E’s Chapter Guarantees Falling Flat – CBS San Francisco

SANTA ROSA (AP) – The country’s largest utility company has long vowed to change its ruthless ways. After leaving a trail of death and destruction through Northern California in less than three years, the fifth CEO of Pacific Gas & Electric has renewed promises that the future will be “easier” and “brighter”.

But the promises CEO Patricia “Patti” Poppe made in her first letter to shareholders sound a year after PG&E emerged from one of the most complex bankruptcies in US history, an act of desperation followed by a series of devastating forest fires that was triggered by its long-neglected power grid.

The bankruptcy, PG & E’s second in less than 20 years, was billed as an opportunity for a utility company that powers 16 million people – a population larger than all but a handful of states – to finally reset Button to press.

So far, however, it has looked more like a reminder of problems that have led to tragedy after tragedy over the past six years, including a 2018 wildfire that killed 85 people and the town of Paradise, about 274 kilometers northeast of, San Francisco was destroyed.

PG&E is already a twice convicted felon and has been charged with another round of arson crimes which it denies commission. The utility was also reprimanded by California regulators and a federal judge overseeing his parole for breaking promises to reduce the dangers of trees near his power lines.

And most of the 70,000 or so victims who have made claims of devastation from PG & E’s past misdeeds are still awaiting payment from a $ 13.5 billion trust created during bankruptcy. The Trust faces a deficit of nearly $ 2 billion because half of its funding comes from company stocks, though critics say it’s foolhardy to hold an interest in a utility company with such a poor record.

These stocks have slumped in a rising stock market. A stroke of luck could still come if PG & E’s shares rebound, as several analysts have forecast, but confidence would find itself in an even deeper hole if the stock fell any further.

There are legitimate concerns that if the utility stirs another deadly wildfire in the next four months, stocks will collapse as most of PG & E’s sprawling service area has sunk into extreme drought and climate change, worsening fire conditions in western America USA contributes.

“Of course I’m nervous. My biggest fear is what will happen to the stock, ”said John Trotter, head of the Forest Fire Victims Trust, which owns almost one in four PG&E shares – far more than any other investor.

Trotter, a retired federal judge who serves as a trustee on $ 1,500 an hour, has other headaches as well. He and over 300 workers have come under heavy criticism for slow payments to victims who lost their families, homes and other property nearly three to six years ago.

In the first six months of its operation last year, the Trust paid out just $ 7.2 million to victims while incurring nearly $ 39 million in operating expenses, which, according to its financial records, reduced the amount available for disbursement .

“I look at it like a locomotive that starts slowly, but we’re blowing the steam off now and we’re starting to roll now,” Trotter said in an interview with The Associated Press. “I just wish I had a wand and could make it go faster, but I can’t. We do everything we can. “

Trotter said he has a plan to eventually sell the stock without paying taxes on potential gains but would not disclose his price target. Stocks, which last hovered around $ 10, must rise to about $ 14 per share for the trust to hit $ 13.5 billion.

Wall Street analysts predict that PG & E’s stock could hit $ 13-17 in the next 12 months, which would mark a dramatic turnaround. The stock is down 17% so far this year, while the S&P 500 is up 14%.

The trust has made some progress. By June 30, it had paid out $ 436.4 million. That’s still only 3.2% of the $ 13.5 billion earmarked for fire victims, a sign of “designed dysfunction” built into the utility’s bankruptcy regimes, said Will Abrams, a victim of a PG&E caused wildfire that terrorized his hometown of Santa Rosa in 2017.

“I was really disappointed,” said Abrams. “The bankruptcy was being sold as something that would hold PG&E accountable, and it wasn’t. Bankruptcy is not a reorganization process. It is a process of dividing the dollars. “

But nearly 45,000 victims voted for the plan, with only 6,109 opposed to it according to court documents, paving the way for US bankruptcy judge Dennis Montali approval.

Many victims were influenced by attorneys who participated in settlement negotiations, arguing that the plan was the best option. Eight of those attorneys are now part of a nine-member supervisory committee on the victim’s trust, an arrangement that Abrams believes was a conflict of interest.

Amy Bach, the only member of the Fiduciary Committee who was not involved in PG & E’s bankruptcy negotiations, insists that everyone tries to ensure that all forest fire victims receive money as soon as possible. The attorneys involved are motivated to achieve this because their fees are dependent on their clients being paid.

“We put as much pressure on the claims team as possible,” said Bach, executive director of United Policeholders, a nonprofit group she founded nearly 30 years ago to fight insurers on behalf of fire victims. “You seem to be hearing us, it feels like things are speeding up.”

Frank Pitre, another member of the oversight committee and one of the attorneys representing burn victims, admitted that things have turned out more slowly than he had hoped. That is one of the reasons why he rates Trotter and his team with a “B” for their commitment to date.

“There is a lot of room for improvement,” said Pitre, but added that “I have no doubt that the effort is there.”

PG&E believes it has already done its part in helping fire victims.

“We financed the trust according to our reorganization plan,” the utility company said in a statement to the AP. “PG&E is not involved in the distribution of trust funds.”

PG & E’s Chief Risk Officer, Sumeet Singh, enumerated a wide range of improvements, including using more advanced technology to prevent forest fires from starting and detect them more quickly.

Although PG&E did not live up to expectations, Singh said, “I am very encouraged by the new leadership, (a) new playbook, rigor and discipline that we are on the right track. We know we can do better and we will do better. “

Trotter, meanwhile, holds his breath as the weather warms and the Northern California landscape dries up.

“We are dealing with the hand that was dealt to us,” said Trotter. “(PG&E) says the right things. Now we just have to see if they are doing the right things. “

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