A utility company with a history of sparking wildfires has agreed to pay $11bn to a group of insurance companies representing claimants from deadly northern California wildfires in 2017 and 2018.
The tentative agreement includes insurance claims from the town of Paradise, where 86 died last November, Pacific Gas & Electric (PG&E) said in a statement Friday.
The agreement comes after the utility filed for bankruptcy protection in January because it could not afford the estimated $30bn in potential wildfire liabilities.
The company, which provides gas and electricity to 16 million Californians, has been found responsible for several other disasters in recent years, including the 2017 North Bay fires, which killed 43 people and destroyed more than 14,700 homes; the 2015 Butte fire, which killed two people and destroyed almost 900 structures; and a 2010 gas line explosion in San Bruno that ripped through an entire neighborhood, killing eight and injuring 58 people. PG&E was fined $1.6bn for the San Bruno explosion and a federal jury found the company guilty of six felony charges, ordering it to pay $3m in fines.
Gerald Singleton, an attorney who represents more than 5,000 victims who lost their homes in northern California wildfires started by the utility’s equipment, said the agreement was a step in the right direction because it meant that the company had reached settlements with insurance companies and public entities.
He added: “Now we just have to get a fair amount for the individuals.”
Insurance companies that reached the settlement said it was well below the $20bn they had sought in bankruptcy court.
The deal removes some of the uncertainty hanging over PG&E as it tries to climb out of its financial pit. The company’s stock rose nearly 11% Friday to close at $11.18.
“Today’s settlement is another step in doing what’s right for the communities, businesses, and individuals affected by the devastating wildfires,” the PG&E CEO, Bill Johnson, said in a statement.
Two major outstanding questions still linger over the bankruptcy, said Michael Wara, a senior research scholar at Stanford University and a member of the state wildfire committee: how much PG&E will pay the outstanding fire victims, and whether a jury will find the utility liable for the 2017 wine country Tubbs fire, which took 22 lives.
“It’s really hard to know what the PG&E bankruptcy resolution will look like, because you don’t know how much money the company has to come up with,” Wara said.
“We want to avoid having ratepayers get punished for this bankruptcy, but the company provides this essential service,” he said. “How that gets resolved is going to be a very tricky process.”
The settlement still must be approved by a bankruptcy court. PG&E on Monday released a plan to offer nearly $18bn total to wildfire victims, insurance companies and cities and public entities in California that battled wildfires sparked by its electrical equipment.
That figure will now climb to nearly $20.5bn, including $11bn for insurance companies as part of the tentative deal; $8.4bn to pay wildfire claims from uninsured victims, which attorneys representing them have rejected as too low; and $1bn to local governments affected by the wildfires.
The San Francisco-based company is under pressure to emerge from bankruptcy by June 2020 to participate in a state wildfire fund. The fund is intended to help California’s major utilities pay out future claims as climate change makes wildfires across the western US more frequent and more destructive.