PG&E reaches $11B agreement to resolve claims related to wildfires
The company has agreed to an $11 billion settlement to resolve approximately 85% of insurance subrogation claims arising from the 2017 and 2018 wildfires.
PG&E Corporation and Pacific Gas and Electric Company (together, PG&E) have agreed in principle with entities representing approximately 85% of insurance subrogation claims to an $11 billion settlement to resolve all such claims arising from the 2017 Northern California wildfires and 2018 Camp Fire.
These claims were based on payments made by insurance companies to individuals and businesses with insurance coverage for wildfire damages.
The proposed settlement is subject to definitive documentation and approval of the bankruptcy court overseeing PG&E’s Chapter 11 case. The settlement is to be implemented pursuant to PG&E’s Chapter 11 plan of reorganization and is subject to confirmation of the plan by the bankruptcy court.
The settlement “is another step in doing what’s right for the communities, businesses, and individuals affected by the devastating wildfires,” said Bill Johnson, the chief executive officer and president of PG&E Corporation. “As we work to resolve the remaining claims of those who’ve suffered, we are also focused on safely and reliably delivering energy to our customers, improving our systems and infrastructure, and continuing to support California’s clean energy goals. We are committed to becoming the utility our customers deserve.”
This was PG&E’s second major settlement of wildfire claims. On June 19, 2019, PG&E and 18 local public entities (cities, counties, districts, and public agencies) announced that they had reached agreements to settle their claims relating to the 2015, 2017, and 2018 wildfires for a total of $1 billion to be implemented as part of the plan. Proceedings regarding the third and final major group of wildfire claims currently are pending in both federal district court and state court.
In connection with the insurance subrogation settlement, PG&E amended previously announced equity financing commitment agreements to accommodate the total amount of subrogation claims contemplated by the settlement and reaffirmed the total $14 billion equity financing commitment target for the plan. PG&E said that it has received renewed commitments of $1.5 billion under the revised equity financing commitments and intends to seek remaining equity financing commitments over the next several weeks.
PG&E added that it expected that the equity financing commitment would be part of a more comprehensive financing package to emerge from Chapter 11. PG&E said that it also expected to amend the plan to incorporate the terms of the settlement of the subrogation claims after completion of the definitive documentation for the settlement.
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