PG&E Corp. CEO Bill Johnson personally urged state lawmakers Wednesday to let the company take on billions of dollars in new debt to help pay victims of catastrophic wildfires caused by its power lines.
Johnson traveled to Sacramento to advocate for legislation that would allow PG&E to use as much as $20 billion in tax-exempt bonds as part of the company’s plan to resolve its bankruptcy case. PG&E unsuccessfully tried to get the bonds authorized as part of a different bill the Legislature passed last month to address future electric utility fire costs, and the company is now making a renewed push for the financing tool to help resolve its liabilities from the past.
Combined with billions of dollars in proceeds from selling new stock in PG&E, the bonds are intended to raise enough money to pay claims from victims of wildfires started by the utility’s equipment, including last year’s historically deadly and destructive Camp Fire. PG&E says the bonds would be paid off with shareholder profits and would not raise customers’ rates.
Still, it’s a tough sell for lawmakers who do not want to look like they’re bailing out the troubled utility — which is exactly how critics are already characterizing PG&E’s legislative plan in a new website.
If anybody is being bailed out here, it’s the victims of wildfires. There is not a single iota of bailout in this,” Johnson told reporters in Sacramento. “We think this is an important tool, and certainly an effective and efficient one, to get victims paid.”
Johnson declined to say whether he plans to meet with Gov. Gavin Newsom or which individual lawmakers he spoke with Wednesday, telling reporters, “I don’t kiss and tell.”
Assemblyman James Gallagher, who represents the town of Paradise, said he would rather hear what the utility is going to do to restore clean water, remove dangerous trees and aid in the recovery of a community that was nearly “wiped off the map” by the Camp Fire.
Gallagher, R-Yuba City, said Wednesday he expected to meet with Johnson that afternoon and has met with a bevy of PG&E lobbyists in recent weeks.
The bond plan is proposed in new amendments to an old bill, AB235, carried by Assemblyman Chad Mayes, R-Yucca Valley.
Mayes said opponents of the plan are “spinning tales” to create a false perception that it’s a PG&E bailout. He said the bill will create a tool for wildfire victims to be paid as quickly as possible.
“In fact, it’s the exact opposite,” Mayes said. “They’re paying for it themselves, the shareholders, 100%.”
Supporters include a group of current PG&E shareholders whose lobbyists have advocated for the debt plan in recent days. The group owns more than 25% of PG&E stock, according to court papers and data compiled by Bloomberg. Backers launched a new website, wildfirerecoverynow.com, to outline their reasons for pushing the plan.
Opponents include The Utility Reform Network consumer group and current PG&E bondholders, and they have launched a public campaign to make their case. The bondholders recently lost a hard-fought attempt to break PG&E’s exclusive right to file a bankruptcy reorganization plan so they could formally propose their own.
In a new website, stopthepgebailout.com, two opposing groups call the company-backed plan “an effort in the California legislature to bail out PG&E on the backs of ratepayers and taxpayers.” The website is supported by the current bondholders and the Agricultural Energy Consumers Association, which represents farming and food-processing utility customers in the state.
Michael Boccadoro, executive director of the energy consumer group, said the bond plan is a bad idea that would primarily benefit PG&E’s equity owners who want to increase the value of their stock.
“They’re just leveraging the future,” he said. “It’s a great (plan) for hedge fund shareholders … not ratepayers.”
Boccadoro noted that, though PG&E says customers won’t be impacted because shareholders will pay off the new debt, the company is already asking regulators to let it raise shareholder profits — which, in turn, will raise rates.
PG&E originally wanted to raise its authorized shareholder returns from 10.25% to 16% to account for its worsening wildfire risks. But the company lowered its request to 12% in light of a bill Gov. Gavin Newsom signed last month that creates a new fund to protect electric companies from future fire costs.
The new request from PG&E would add more than $4 to the monthly bill of an average residential customer, according to the company. Johnson said it’s not directly related to the new debt plan. California’s two other major investor-owned utilities, Southern California Edison and San Diego Gas & Electric, have filed similar requests, and they are not looking for bond authorization from the legislature.
And the clock is ticking, with less than four weeks before the legislature adjourns for the year Sept. 13. That gives PG&E a narrow window to get the bill through public hearings and floor votes in the state Assembly and Senate.
But the bill might not make it that far because introducing legislation this late in the session would require lawmakers to waive various procedural rules.
Such a maneuver would likely require the support of Assembly Speaker Anthony Rendon and Senate President pro Tempore Toni Atkins. It’s not clear whether they will support PG&E’s last-minute gambit.
A spokeswoman for Atkins’ office said in an email that “there has been no decision by the Senate Rules Committee to grant the rule waivers necessary to hear any legislation related to PG&E prior to the legislature adjourning.”
Wildfire victims could also prove central to the legislation’s outcome. Patrick McCallum, who heads a group called Up from the Ashes that advocates for fire victims, said he believes “the votes are not there without our support.”
“We would have to come up with something that members really trust is delivering something for victims,” McCallum said. “At this point, they’re not trusting PG&E.”