PG & E, a group of utility companies in California, which is one of the largest US buyers of renewable energy sources, will declare bankruptcy later this month when it will not get tangible due to its spiral liabilities arising from recent catastrophic fires in the country.
PG & E, headquartered in San Francisco, whose Pacific Gas & Electric unit delivers energy in the northern two-thirds of California, has been in crisis for some months now after being investigated on the role that one of its high-voltage power lines could play Camp Fire in 2018 – the deadliest and most devastating fire in California's history.
In a statement issued on Monday, PG & E said that by the end of January it will file a claim for bankruptcy under Chapter 11, which will allow the voluntary reorganization of its companies and liabilities in order to re-establish itself as a successful company. The resignation of Executive Director Geisha Williams was announced this weekend.
Problems with PG & E, which were bankrupt in Chapter 11 during the California electricity crisis, reappeared three years later, causing a lot of headaches for California regulators and legislators.
At one point at the end of last year, it seemed that regulators could come to the rescue of PG & E, but the company reported that $ 30 billion or more of the commitments associated with recent fires were untenable. PG & E shares collapsed by 50% on Monday, which has already lowered the level, resulting in a market value of around $ 9 billion.
"We believe that the process controlled by the court in accordance with Chapter 11 will best enable PG & E to resolve its potential obligations in a fair, honest and fast manner," said CEO Richard C. Kelly in a statement.
PG & E supplies electricity and gas to 16 million people in the service area of 70,000 square miles (181,000 square kilometers) and operates over 120,000 kilometers of distribution and transmission lines. It is the largest of the three major investor companies in California, in addition to Southern California Edison and Semi-Gas & Electric.
For the renewable energy industry, there are great questions about whether the bankruptcy will affect the vast collection of existing renewable energy sources agreed by PG & E and whether a lengthy reorganization will slow down new business in the country.
While preserving the large generation fleet in the house, large utility companies in California typically sign PPA contracts for wind and solar energy with third-party developers, as they move towards a renewed renewable 60% renewable energy mandate for 2030. California also aims to reach 100 % of renewable energy by 2045.
Analysts, such as Credit Suisse, have said that it is unlikely that the existing PPPs for renewable energies of PG & E would be re-negotiated in bankruptcy, but the industry will be closely monitored, especially given the extent to which the price of wind and solar energy in recent years.
PG & E has an existing PPA with a long list of developers of renewable energy sources, including Consolidated Edison, NextEra Energy and EDF.
"Our goal is to work together to strike a balance between the interests of our many stakeholders – including fire victims, clients, employees, creditors, shareholders, the financial community and business partners – and create a sustainable basis for providing our customers with secure services in the coming years" Kelly said.
PG & E says it will continue to provide normal services as it prepares bankruptcy.
Many observers, including California legislators, have linked California's more frequent fires with climate change.