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CPUC vote allows PG&E to access $6b in loans ahead of bankruptcy filing

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Anti-PG&E protesters rally outside the California Public Utilities Commission headquarters before an emergency meeting on PG&E bankruptcy matters on Monday, Jan. 28, 2019. (Kevin N. Hume/S.F. Examiner)

In a contentious “emergency meeting” Monday California regulators paved the way for PG&E to get some $6 billion in loans ahead of its bankruptcy filing.

PG&E is facing billions of dollars in payouts for its liability in 2017 and 2018 wildfires, prompting the utility to file for Chapter 11 bankruptcy Tuesday.

However, existing law caps the dollar amount the utility could borrow at $500 million. To prop itself up through bankruptcy, last week PG&E asked the state to authorize it to seek billion-dollar bank loans.

SEE RELATED: PG&E filing for bankruptcy due to wildfire liability

Critics of PG&E characterized Monday’s emergency California Public Utilities Commission vote as the gateway to a “bailout” for a failing institution whose negligence led to dozens of deaths, from the 2010 San Bruno explosion to recent Northern California wildfires.

Activists from across the Bay Area, including the San Francisco and East Bay Democratic Socialists of America and public-power groups like the Local Clean Energy Alliance, drowned out commissioners with cries of “murderers!” and “sell-outs!” during the vote, and called for the commission to instead begin the process of instituting a state public power alternative.

If PG&E obtains the loans it seeks “they’ll prioritize paying J.P. Morgan Chase over fire victims” who sued for relief, said Faiq Raza, a DSA member, during public comment.

Raza and other activists also hotly criticized the public utilities commission over a lack of transparency around the loan’s structure.

Progressive political groups aren’t the only opponents of PG&E filing for bankruptcy — BlueMountain Capital Management, LLC, a major PG&E shareholder, issued an open letter challenging the utility’s decision to file for bankruptcy.

“We simply cannot recall a situation where such a valuable company filed for bankruptcy with such blatant questions about the necessity of doing so,” the company’s leadership wrote.

BlueMountain’s letter also claimed PG&E has “ample liquidity to operate” and the amount of liability PG&E will truly face remains “uncertain and contestable.” Notably, Cal Fire recently cleared PG&E as the culprits in the Tubbs Fire, pinning the blame on a private electric system.

SEE RELATED: Breed calls for public power study in wake of PG&E bankruptcy announcement

San Francisco Supervisor Aaron Peskin also wants to put The City on record urging state legislators and regulators to “protect California consumers” by holding PG&E responsible for its role in recent wildfires.

Peskin plans to introduce a resolution to the Board of Supervisors on Tuesday calling on regulators to avoid passing the costs of wildfire damage along to ratepayers and to update liability codes to “incentivize utilities to prioritize safety over profit.”

Between jeers from the activists, CPUC President Michael Picker outlined dire days coming for PG&E, and worse consequences should they not obtain needed funding.

If PG&E fails, critical infrastructure like hospitals and public facilities, not to mention Californians’ homes, could suffer power outages, Picker said.

“This commission faces a substantial risk that the public health and safety of California will be severely impaired, with potentially catastrophic results,” he said.

Edward Randolph, the commission’s deputy executive director for energy and climate policy, told reporters Monday that the commission’s vote does not allow ratepayer hikes, nor does it “encourage” the utility to seek bankruptcy.

The vote did allow the commission to approve, or not approve, what collateral would be taken into possession by lenders issuing loans to PG&E, he said.

He also noted that the protesters Monday were clamoring for speed on a process the commission has started exploring already: transitioning California to true public power.

“We have opened up proceeding to look into the very issues the protesters asked for,” he said.

That process is in its earliest stages, however, and Randolph said he was unsure how — or if — PG&E’s bankruptcy could clear the way for public power.

joe@sfexaminer.com

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