Thomas Elias: PG&E’s victims will face choice: fairness or fastest money
All through the bankruptcy process Pacific Gas & Electric Co. entered in early 2019, almost all key moves have been made by platoons of lawyers working for the big utility, its creditors and more than 80,000 burned-out victims of wildfires started at least in part by faulty PG&E equipment or maintenance.
But the biggest decision in the complex and costly proceedings will likely be made within the next two months by the victims themselves: a vote on whether to accept an approximate $13.5 billion settlement agreed upon by PG&E and attorneys for thousands of the victims.
Here’s the choice for victims who will vote: Should they each accept almost $100,000 in cash pretty soon, plus many shares of PG&E stock of uncertain future value, or should they insist on all cash, with payment to be made at an uncertain later date, if at all?
It’s a tough dilemma for a lot of uninsured folks, for replacement of burned-out homes will cost much more than the proffered cash. But some of the victims’ lawyers are telling their clients the settlement the attorneys agreed to is all PG&E can pay in the foreseeable future.
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The choice, as some see it, will be between getting cheated, or at least low-balled, or getting nothing for now.
No one yet knows how that choice will play out, or just when the vote will occur, in part because the settlement offer can’t be finalized until and unless the state Public Utilities Commission (PUC) okays PG&E’s not-yet-finalized full plan for exiting bankruptcy. But in most lawsuit settlement negotiations, clients accept offers their attorneys recommend.
PG&E desperately wants the whole matter over with by June 30, the deadline for the utility to qualify for a consumer-funded, state-organized plan that shields utilities against paying many of expenses from future fires started by their equipment.
Plenty of wildfire victims have told U.S. Bankruptcy Judge David Montali, presiding over the PG&E case in San Francisco, that they’ll feel cheated if the settlement goes through.
Wrote one survivor of the 2018 Camp Fire in Butte County, California’s most damaging wildfire ever, “Our hopes will be shattered if the current plan is approved. I want you to know that many of us understand what is happening and we will move heaven and earth to stop it.”
That letter and others released by the court indicate many fire victims believe Montali acts as a tool of PG&E’s management and Wall Street creditors, rather than making victim compensation his top priority.
One thing many victims dislike is that half the money would come in the form of company stock, which many victims want no part of, if only because the stock is not valued today at nearly the amount listed in the settlement. Plus, many victims don’t want to become unwilling accomplices and shareholders of the company they feel destroyed their once-bucolic lives.
And even if victims eventually vote for the settlement, they won’t get their money and stock immediately. Rather, the funds and shares would go to a new distribution trust that will handle each case individually. The trust has not yet been set up, which means that even if they vote “yes” on the settlement, victims can’t know just how much cash and stock they would get, or when.
It all adds up to one of the most uncertain situations ever to affect California public utility customers. One big unknown is whether the PUC, now led by an appointee of Gov. Gavin Newsom but still peopled with a majority named by ex-Gov. Jerry Brown, will echo Newsom’s demands for a much stricter, larger and more expensive program than ever before for equipment repair and fire prevention.
Usually, California utilities have been able to count on the PUC to assure both their survival and prosperity. But Newsom threatens a state takeover if the eventual PG&E plan isn’t much tougher than what’s been proposed to date and his appointees might do his bidding.
Which means a “no” vote by either the PUC or the victims could throw the biggest utility in this state and nation into completely uncharted territory, with a breakup or a buyout two distinct possibilities.
Email Thomas Elias at email@example.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, visit http://www.californiafocus.net.
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