California's Largest Utility Goes Bankrupt Under Billions In Wildfire Debt

California utility equipment sparked more than 2,000 fires in over three years

The move also faced pushback from some investors: Fund manager BlueMountain Capital Management issued an open letter to PG&E shareholders last week, arguing that the bankruptcy filing is unnecessary, and called for a new board of directors for the company. Rather, they along with the company's creditors and suppliers, will need to tussle for a payout from the company.

PG&E faces court in San Francisco today, a day after filing for bankruptcy.

Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires.

California's power grid operator said on Tuesday the bankruptcy filing by PG&E Corp and its Pacific Gas and Electric Co utility, the biggest USA power company, has not had any effect on the state's power grid and energy markets. Although a legislative effort to extend the law's coverage to 2018 fires was launched in November, the lawmaker behind the effort announced he was scrapping it last week, after PG&E notified the state it was planning to file for bankruptcy.

This week, investigators with the California Department of Forestry and Fire Protection cleared PG&E of responsibility for starting the Tubbs Fire, slashing the estimated $15 billion in damages from that fire from its list of liabilities. PG&E is facing roughly $30 billion in potential liability after it caused hundreds of fires in the past few years.

The Chapter 11 filing allows PG&E to continue operating while it puts its books in order. State investigators determined that PG&E's equipment sparked or contributed to more than a dozen of those fires, which killed 22 people. The cause is under investigation, but suspicion fell on PG&E after it reported power line problems nearby around the time the fire broke out.

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PG&E crew work to fix damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018.

The shares rose because "you've got some guys who are looking at their estimates of future recovery and thinking that there's going to be positive recovery for the equity", Katie Bays, a Washington-based analyst at Height Securities LLC, said in an interview Tuesday. Company advisers expect that it may take up to two years to emerge from bankruptcy.

Federal energy regulators said on Friday they had joint jurisdiction with a bankruptcy court over requests to cancel or renegotiate power contracts by PG&E.

Utilities around the nation are preparing for the potential effects of climate change, taking such steps as fortifying substations and burying power lines against severe hurricanes and wildfires. To achieve that, utilities must switch to buying power from renewable sources. Williams had served as PG&E's CEO since March 2017. But because of the utility's bankruptcy, some experts have questioned its ability to pay what it agreed to, or to make the investments in grid upgrades and batteries necessary to bring more renewable energy online.

PG&E's stock is down 70 percent from about a year ago amid fears about the effects of the wildfires.

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