PG&E reaches USD 11B deal with California wildfire insurers

Pacific Gas & Electric has agreed to pay USD 11 billion to a group of insurance companies representing claimants from deadly Northern California wildfires in 2017 and 2018 as the company tries to emerge from bankruptcy, the utility announced Friday.

The utility said in a statement the tentative agreement was reached with insurance companies holding 85 per cent of the insurance claims from fires that included the November 2018 blaze that destroyed the town of Paradise, killing 86 people.

It does not include thousands of uninsured and underinsured fire victims who have filed their own claims against PG&E, including for wrongful deaths.

The insurers said in a separate statement the settlement is well below the USD 20 billion the companies had sought in bankruptcy court, although it is more than PG&E offered as part of a filing in bankruptcy court earlier this week.

"While this proposed settlement does not fully satisfy the approximately UUD 20 billion in group members' unsecured claims, we hope that this compromise will pave the way for a plan of reorganization that allows PG&E to fairly compensate all victims and emerge from Chapter 11 by the June 2020 legislative deadline," the insurers said.

The deal removes some of the uncertainty hanging over PG&E as it tries to climb out of its financial pit. The company's stock rose nearly 11% Friday to close at USD 11.18.

"Today's settlement is another step in doing what's right for the communities, businesses, and individuals affected by the devastating wildfires," PG&E CEO Bill Johnson said in a statement.

Two major outstanding questions still linger over the bankruptcy, said Michael Wara, a senior research scholar at Stanford University and a member of the state wildfire committee: How much PG&E will pay the outstanding fire victims, and whether a jury will find the utility liable for the 2017 wine country Tubbs fire that took 22 lives.

"It's really hard to know what the PG&E bankruptcy resolution will look like. Because you don't know how much money the company has to come up with," Wara said.

"We want to avoid having ratepayers get punished for this bankruptcy, but the company provides this essential service," he said.

"How that gets resolved is going to be a very tricky process."
The utility had talked about payments to the insurance group "in the $8 billion range. Instead they've agreed to USD 11 billion."