PG&E Co. told a federal bankruptcy court in its bankruptcy petition Tuesday that its estimated liability in the wake of devastating Northern California wildfires is more than $50 billion.
The amount was specified in the utility's petition in U.S. Bankruptcy Court in San Francisco for Chapter 11 bankruptcy protection. The Chapter 11 procedure freezes a company's debts but allows it to keep operating while developing a financial reorganization plan.
In a companion filing, PG&E explained it currently faces more than $30 billion in possible liability from wildfire lawsuits and claims, but said that number doesn't include potential punitive damages and fines and said it expects additional lawsuits and claims.
"PG&E initiated these Chapter 11 cases to address extraordinary financial challenges," the company's lawyers wrote.
"That potential exposure has resulted in a severe deterioration of (PG&E's) credit profile and liquidity position," they said.
PG&E Corp., the utility's parent holding company, filed a twin petition seeking Chapter 11 protection and gave the same estimate of more than $50 billion in potential liability.
The company said in a statement it will continue providing electricity and natural gas, investing in system safety and paying its 24,000 workers while seeking an "orderly, fair and expeditious resolution of its liabilities from the 2017 and 2018 fires."
"Our most important responsibility is and must be safety, and that remains our focus," Interim CEO John Simon said.
San Francisco-based PG&E, which is owned by shareholders, provides electricity and natural gas to 16,000 customers in Northern and Central California.
Gov. Gavin Newsom said, "My administration will continue working to ensure that Californians have access to safe, reliable and affordable service, that victims and employees are treated fairly, and that California continues to make forward progress on our climate change goals."
Tom Dalzell, the business manager of the union International Brotherhood of Electrical Workers Local 1245, said, "At this point, we do not know exactly what the utility will look like once it emerges from bankruptcy.
"However, we remain fully committed to protecting our members' jobs, as well as the wages and benefits that they have earned, so that they can continue to provide safe and reliable gas and electric service to millions of Californians in thousands of communities across the state," Dalzell said.
PG&E also said Tuesday it has secured $5.5 billion in loans from several banks to pay its operating costs during the bankruptcy.
The path for that step was cleared on Monday when the California Public Utilities Commission gave the utility approval to borrow up to $10 billion for its operating expenses.
The bank loans will be given top priority for repayment and for possible liens on PG&E's assets, according to the utility's filings.
The utility filed a series of motions asking the bankruptcy court to allow it to continuing paying workers' wages and benefits, to continue paying suppliers and to promise the banks the priority in the repayment of the loans.
U.S. Bankruptcy Judge Dennis Montali scheduled a hearing for Thursday on 17 preliminary motions by PG&E Co. in its Chapter 11 bankruptcy case.
The motions to be heard by U.S. Bankruptcy Judge Dennis Montali include requests for approval to continue paying the utility's 24,000 workers, to continue paying electricity and natural gas suppliers and to go ahead with receiving $5.5 billion in bank loans while giving those banks top priority for repayment.
Montali is the same judge who presided over PG&E's previous Chapter 11 bankruptcy in 2001. That bankruptcy came in the midst of billions of dollars of debt for spiraling wholesale electricity costs during the state's 2000-01 energy crisis.
It was for the most part resolved in 2004 with shareholders forgoing some dividends and customers paying surcharges for nine years.