PG&E to use wildfire victims fund to pay for past crimes

BERKELEY, Calif. (AP) — Pacific Gas & Electric is warning its elaborate plan for getting out of bankruptcy might collapse if the utility can’t pay for its crimes in a deadly Northern California wildfire by taking money away from a fund set up to compensate thousands of victims for their losses.

The latest twist in an already complicated saga emerged this week after PG&E disclosed it will plead guilty to 84 felony counts of involuntary manslaughter for neglecting to properly maintain equipment that ignited a 2018 wildfire that destroyed three towns in Butte County.

PG&E will pay a $4 million penalty as part of the plea agreement, but plans to do so by drawing upon a $13.5 billion settlement that it reached with wildfire victims as part of its bankruptcy case.

Although the $4 million represents a tiny fraction of the $13.5 billion fund, the notion that PG&E may be siphoning away any money earmarked for fire victims to pay for its criminal behavior is provoking more outrage about a company already widely unpopular for its role in other catastrophic wildfires, a malfunctioning gas line that blew up a neighborhood, and its bungling of power outages.

“It is my sincere hope that PG&E finds another way to pay the penalty because it's not what I want, and it certainly doesn't look good for PG&E in terms of the public relations or the overall optics," Butte County District Attorney Mike Ramsey told The Associated Press.

Ramsey, though, said he has no control over over where PG&E gets the money to pay the fine.

PG&E also says its hands are tied by a clause included in the settlement with wildfire victims that won bankruptcy court approval three months ago. The provision requires all fines and other penalties arising from the wildfires that drove PG&E into bankruptcy last year be paid from the victims' fund.

If PG&E doesn't abide by the settlement terms, the company said it could cause other deals reached in its complex case to unravel. In addition to the victims' fund, PG&E has negotiated another $12 billion in settlements with insurers and government agencies, and also has lined up commitments to raise tens of billions of dollars through stock sales and loans to help the company continue to operate after it gets out of bankruptcy. PG&E also expects to pay $1.6 billion to the lawyers, bankers and other specialists that help it put together its bankruptcy deals.

Any revisions to its past settlements “risks investors walking away from their commitments to provide the funding essential to the company’s ability to make payments to victims," PG&E said in a statement Friday.

But PG&E already has made several other changes to its plan since reaching the settlement with wildfire victims. The latest, reached with Gov. Gavin Newsom, came just a week ago. PG&E left the crack open for making a change that would allow it to pay its criminal penalty without tapping into the victims' fund if it can get “the necessary consents."

U.S. Bankruptcy Judge Dennis Montali has made it clear throughout the case that he is unlikely to approve any plan that doesn't pay the wildfire victims as much as possible. The judge could still prevent PG&E from using the victims' fund to pay its criminal fine.

Some of the more than 81,000 victims who filed claims in PG&E's bankruptcy case already have been raising doubts about whether the $13.5 billion will be enough to pay everyone for the losses of loved ones and property in a series of 2017 and 2018 fire that killed nearly 130 people and destroyed more than 25,000 homes and other buildings. Two of the victims, Kirk Trostle and Adolfo Veronese, recently resigned from a 11-person committee overseeing people's claims in the bankruptcy case because of their misgivings over the settlement with PG&E.