SAN FRANCISCO–(BUSINESS WIRE)–PG&E Corporation (the “Company”) and Pacific Gas and Electric Company (the “Utility”, together “PG&E”) today announced that PG&E has emerged from Chapter 11, successfully completing its restructuring process and implementing PG&E’s plan to reorganize (“Plan” which was affirmed by the United States Bankruptcy Court on June 20, 2020.
“Today’s announcement is important for PG&E and for the many victims of the wildfires who are now about to be paid. Compensating these victims fairly and quickly has been our primary goal throughout this process. , and I’m happy to say that today we funded the Fire Victim Trust for their benefit,” said Bill Smith, Acting Chief Executive Officer of PG&E Corporation. Our exit from Chapter 11 marks just the beginning of the next era of PG&E, as the fundamentally improved company and safe, reliable public service that our customers, our communities, and California deserve.
PG&E’s emergence from Chapter 11 is a milestone on several fronts:
PG&E has implemented the settlement and resolution of all wildfire related claims according to plan;
PG&E elected to participate in state wildfire fund;
PG&E Corporation has installed its new board of directors;
PG&E is moving forward with commitments to its governance, operations and financial structure to prioritize safety; and
As a result of Chapter 11 proceedings, PG&E retired expensive high-coupon debt and replaced it with lower-cost debt, generating significant annual savings for customers over the life of the debt, estimated at approximately $250. million dollars per year.
Payment of forest fire regulations
Pursuant to the plan – which was upheld by the bankruptcy court, approved by the California Public Utilities Commission and accepted by more than 85% of fire victims who voted on it – all negotiated settlements of claims related to the fires of forest have been implemented as planned in the Plan.
Under the plan, PG&E has now funded the Fire Victim Trust established to satisfy the claims of individual wildfire victims and others. The Fire Victim Trust’s funding schedule is as follows: $5.4 billion in cash on the effective date of the plan, July 1, 2020; an additional $1.35 billion in cash in two installments in 2021 and 2022; Common stock of PG&E Corporation as of the effective date of the Plan representing 22.19% of common stock outstanding as of such date (subject to potential adjustments); as well as certain other rights. A $700 million payment scheduled for 2022 will be accelerated if the CPUC approves the rate-neutral securitization application that PG&E filed on April 30, 2020.
The Fire Victim Trust will be administered by the Fire Victim Trustee and the Claims Administrator, both of whom have been approved by the bankruptcy court. Neither the Trustee, the Hon. John K. Trotter (retired) nor Claims Administrator Cathy Yanni are associated with PG&E Corporation or the utility. The Fire Victim Trust is solely responsible for the administration, investigation and satisfaction of all fire victim claims. The Fire Victim Trust has adopted Claims Resolution Procedures for the administration and resolution of fire victim claims. Neither PG&E Corporation nor the utility will have any role or responsibility in the administration of the Fire Victim Trust. The Fire Victim Trust website, which is operated by the Claims Administrator, can be found at www.firevictimtrust.com.
In addition to funding the Fire Victim Trust, PG&E also funded two additional wildfire settlements, paying approximately $1 billion to satisfy wildfire claims from certain cities, counties and other public entities, and paying a $11 billion settlement to insurance companies and other entities that have paid private and business claims related to wildfires in recent years.
Participation in the State Wildfire Fund
Today’s announcement also confirms PG&E’s participation in the California Wildfire Fund established by AB 1054. PG&E today deposited approximately $5 billion into the Wildfire Fund, representing contributions initial and first annual contributions from PG&E.
New Board of Directors
As announced last month, PG&E Corporation’s New Board of Directors is now officially in place with the Company’s new interim CEO, Bill Smith, who officially took over from outgoing CEO, Bill Johnson, effective July 1, 2020. The new Board consists of 14 members, 11 of whom are new. Board members bring considerable expertise in key areas, including utility operations and management, safety and environment, risk management, customer engagement, innovation and technology, regulatory affairs (state and federal), audit and finance, corporate governance, nuclear operations and decommissioning, and human capital and executive compensation. In addition, six of the 11 new directors hail from California and have made careers in the state, gaining in-depth knowledge of the communities PG&E serves and the political, social and physical environment in which PG&E operates.
“We know that actions speak louder than words. As the new interim CEO and on behalf of PG&E’s new Board of Directors, I can assure you that we are fully committed to continuing to implement comprehensive and meaningful changes to position PG&E for the long term,” said Smith. .
Implementing plan commitments to further improve safety and enhance PG&E’s ability to serve its customers and communities over the long term
As part of its plan, PG&E has made a series of commitments, some of which are already underway, regarding its governance, operations and financial structure, all designed to put safety first. PG&E made these commitments in conjunction with the Governor’s Office and incorporating advice from CPUC Chairman Batjer, which was included in the Commission’s approval of the plan.
Supported the CPUC’s adoption of measures to strengthen PG&E’s governance and operations, including enhanced regulatory oversight and enforcement that provide course correction tools as well as stricter enforcement if needed;
Began hosting a state-appointed observer to provide the state with an overview of PG&E’s progress on safety goals;
appoint an independent security monitor when the term of the court-appointed federal monitor expires;
Establish the newly expanded roles of Chief Risk Officer and Chief Security Officer, both reporting directly to the CEO of PG&E Corporation;
Formation of an independent Safety Oversight Committee to provide independent review of operations, including compliance, safety leadership and operational performance;
Assumed all collective bargaining agreements with unions, pension and other employee obligations, as well as all power purchase agreements and community choice aggregation service agreements;
Reform of executive compensation to link it more to safety performance and customer experience;
A commitment that PG&E Corporation will not reinstate a common stock dividend until it recognizes $6.2 billion in non-GAAP core earnings;
Filed a proposal with the CPUC requesting a $7.5 billion rate-neutral securitization transaction following PG&E’s exit from Chapter 11 to fund costs in an efficient manner that benefits customers and expedites payment to victims of forest fires; and
Commit not to seek to recover from customer rates any portion of the amounts that will be paid to victims of the 2015, 2017 and 2018 wildfires under the plan when PG&E exits Chapter 11 (except through the securitization transaction at neutral rate).
Also on July 1, 2020, PG&E implemented the Noteholder Restructuring Support Agreement, including the implementation of the Debt Exchange, the reinstatement and securing of certain debts, and the payment of interest. accrued under the plan. The debt exchange and reinstatement and distributions of accrued interest to Noteholders will be completed as soon as practicable. Questions may be directed to PG&E’s administrative agent, Prime Clerk LLC, by emailing [email protected] More information can also be found at https://restructuring.primeclerk.com/pge/.
This press release contains forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E Corporation and Pacific Gas and Electric Company, including, but not limited to, statements about the Fire Victim Trust, the implementation of commitments made under the Plan, including governance, operational and financial commitments, estimated annual cost savings to customers resulting from the funding of urgency, and commitments and expectations, including timing, relating to the payment of any dividend. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include the factors disclosed in the joint annual report of PG&E Corporation and Pacific Gas and Electric Company on Form 10-K for the fiscal year ended December 31, 2019, their Joint Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and their subsequent reports filed with the Securities and Exchange Commission (the “SEC”) , which are available on the PG&E Corporation website at www.pgecorp.com and on the SEC website at www.sec.gov. Additional factors include, but are not limited to, those associated with the Chapter 11 cases of PG&E Corporation and Pacific Gas and Electric Company which commenced on January 29, 2019. PG&E Corporation and Pacific Gas and Electric Company assume no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians over a 70,000 square mile service area in northern and central California. PG&E Corporation and the utility are each a separate entity, with separate creditors and claimants, and are subject to separate laws, rules and regulations. For more information, visit pgecorp.com.