California Wildfires Appear to be a Year-Round Danger. Meanwhile, PG&E Seeks Bankruptcy “Protection” | Levin Papantonio - Personal Injury Lawyers

California Wildfires Appear to be a Year-Round Danger. Meanwhile, PG&E Seeks Bankruptcy “Protection”

Global climate change has begun a vicious cycle in California. What was once a seasonal hazard is now 12 months a year, according to a report published earlier this month in Bloomberg. Because of warming, large areas of the Golden State have been “riddled with pockets of dry bush” and nearly 130 million trees have died. As a result, wildfire danger is now constant, not just during summer and early fall.

Meanwhile, the corporate criminal recidivist that has been responsible for much of the destruction faces an estimated $30 billion in liability. This week, the San Jose Mercury News reported that $12.4 billion in insurance claims have been filed in connection with the recent fires – and there is no end in sight.

Confronted by this situation, PG&E has announced its intent to file for bankruptcy. A company spokesperson said that Chapter 11 bankruptcy protection is “...the only viable option to restore PG&E’s financial stability to fund ongoing operations and provide safe service to customers.” What it is more likely to mean is that customers are going to wind up paying for the power company's reckless behavior – in more ways than one.

It isn't the first time ratepayers have had to pay for PG&E's mistakes. Eighteen years ago, PG&E filed for bankruptcy in the wake of the Enron scandal after the latter had engaged in fraudulent manipulation of California's energy market. At that time, state regulators allowed PG&E to force its ratepayers to pick up the tab in the form of utility rates that exceeded market rates. This was made possible due to the fact that PG&E runs a virtual monopoly in the regions it “serves.”

It is also arguable that PG&E was a “victim” of Enron's machinations. However, this is not the present case. Since the 2010 San Bruno explosion, PG&E has been found responsible for numerous disasters because of its failure to conduct routine maintenance and follow safety regulations. The corporate offender was placed on probation for the San Bruno disaster, and there is a real possibility that its role in causing the recent wildfires constitutes a violation of that probation.

Nonetheless, PG&E has already asked the state Public Utilities Commission to allow it to raise its rates on consumers in order to recoup its losses. Furthermore, lobbyists in Sacramento are asking legislators to step in and cap its liabilities in connection with the fires. All of this means that once again consumers could be required to pay for the company's damage.

There is also the matter of victims of California wildfires whose homes were underinsured, or lacked coverage for personal injuries, medical, and relocation costs, as well as those who will be required to upgrade their fire protection as new regulations kick in. While these people will certainly get something, it could wind up being pennies on the dollar while the outlaw corporation “restructures.”

All of this depends on whether or not PG&E will be allowed to survive. Even if it is not executed by the state (by revoking its charter and auctioning off its assets), there is serious concern among shareholders as to whether or not the company is viable. PG&E stock has fallen by 80 percent in the wake of the Camp Fire, which translates into $19 billion of its market value. There is also the justifiable rage among Californians who have suffered and politicians who are reluctant to alienate their constituents by defending PG&E – but at the same time, are beholden to corporate interests.

Yet another problem: a PG&E bankruptcy could be a serious setback for clean energy initiatives, including solar and wind-generation. These initiatives have provided a mixture of incentives for companies like PG&E to buy power from smaller, renewable generation companies, often at above market value.

A PG&E bankruptcy may force those renewable energy suppliers to renegotiate such contracts. Ralph Cavanaugh, speaking for the National Resources Defense Council, told the Washington Post in an email message that PG&E's yearly commitment have been running over $1 billion a year. While expressing sympathy for the victims of California wildfires, Cavanaugh added, “Victims’ interests won’t be served by pushing utilities into bankruptcy, converting wildfire sufferers into one more class of frustrated creditors pursuing inadequate funds.”