Facing potentially more than $30 billion in damage claims from California wildfires, Pacific Gas & Electric Corp., officially filed for bankruptcy Tuesday.
The nation's largest utility filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Northern District of California. PG&E took the action despite state investigators last week concluding the utility's equipment did not cause a 2017 Northern California wine country fire that killed 22 people.
The utility faces hundreds of lawsuits from thousands of plaintiffs involving that fire and others in recent years including the Camp Fire in November 2018, the nation's deadliest blaze in more than a century that killed 86 people and destroyed about 15,000 homes, as well as hundreds of commercial structures.
The cause of the Camp Fire is still under investigation, but PG&E reported power line problems near the location around the same time as the fire started.
If the utility is found liable for that fire and others in 2017 and 2018, its liability could exceed $30 billion, when punitive damages, fines and other penalties are factored in, PG&E said in bankruptcy documents.
"The multitude of pending claims and lawsuits, and the thousands of additional claims that will be asserted, made it abundantly clear that PG&E could not continue to address those claims and potential liabilities in the California state court system, continue to deliver safe and reliable service to its 16 million customers, and remain economically viable," the utility wrote in its bankruptcy filing.
California law makes utilities entirely liable for damage from wildfires sparked by their equipment, regardless of whether they are found to be negligent. PG&E provides natural gas and electric service to 16 million people over a 70,000-square-mile area in northern and central California.
By filing for bankruptcy, PG&E will see the wildfire lawsuits consolidated in bankruptcy court, which will likely take years to resolve, legal experts say. Victims will likely receive less money and customers could see higher utility rates as a result, experts say.
However, PG&E said it is committed to helping those affected by the wildfires and would not speculate on any changes to customers’ bills, noting that the California Public Utilities Commission sets electric and gas rates.
PG&E shares (PCG) have fallen 70 percent over the last 12 months, but buoyed somewhat last week to $12 after news that the utility's equipment did not cause the 2017 fire. Shares were down slightly in premarket trading Tuesday.
PG&E said the bankruptcy filing will not affect electricity or natural gas service but allow for an “orderly, fair and expeditious resolution” of potential liabilities from the wildfires.
The utility will continue to pay and provide health care and other benefits to employees. "Through this process, we will prioritize what matters most to our customers and the communities we serve – safety and reliability. We believe that this process will make sure that we have sufficient liquidity to serve our customers and support our operations and obligations," said John Simon, interim CEO of PG&E Corp., in a statement.
As part of its court filings, PG&E is seeking court approval for a $5.5 billion debtor-in-possession financing to continue its operations for the next two years. The utility reported about $71.4 billion in assets and about $51.7 billion in liabilities in its filings.
The utility also filed for bankruptcy in April 2001 near the height of an electricity debacle marked by rolling blackouts and manipulation of the energy market. PG&E emerged from bankruptcy three years later but obtained billions of dollars in higher payments from ratepayers.
Contributing: The Associated Press.
Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.
This article originally appeared on USA TODAY: PG&E files for bankruptcy amid California wildfire lawsuits, citing billions in claims