SACRAMENTO – PG&E Corp. made an $11 billion settlement Friday to reimburse insurance companies for claims paid following the 2017 and 2018 wildfires – but angered representatives for thousands of fire victims who are still waiting for checks.
The deal is designed to smooth PG&E's exit from bankruptcy as the utility struggles with the financial fallout from the 2017 wine country fires and last November's Camp fire.
However, the agreement appears to take money off the table for thousands of individual homeowners, business owners and others who were uninsured or under-insured, and are still owed billions.
Here's why: The $11 billion settlement is $2.5 billion more than what PG&E offered the insurance carriers Monday, when it outlined a proposal to pay insurers $8.5 billion and individual victims $8.4 billion, for a total of $16.9 billion. Yet in a Securities and Exchange Commission filing Friday, the company said it was raising the combined payout to all claimants by just $1 billion, not $2.5 billion.
That suggests the company is scaling back its offer to the individual victims by $1.5 billion, said Patrick McCallum, a wine country fire victim and head of the lobbying group Up from the Ashes.
"They're clearly trying to squeeze victims," McCallum said. McCallum said his group could align itself with another major group involved in the PG&E drama: a group of hedge funds that control billions of dollars in PG&E bonds and are trying to seize control of the company in a hostile takeover.
"They're not home free," McCallum said of PG&E.
PG&E, however, insists it isn't lowering its offer to fire victims; it could end up increasing the ante to them as well.
"I don't think it's fair to say that we're taking from one pot to give to another," said utility spokesman James Noonan. "The pot could change."
Bill Johnson, PG&E's chief executive, said in a prepared statement that the company is working "to resolve the remaining claims of those who've suffered." The company also reaffirmed its commitment to paying an additional $1 billion to satisfy a previously announced settlement with local governments affected by the wildfires.
PG&E on Friday said it is amending its reorganization plan and is working with financial backers to get additional funding for the insurers; it already has commitments of more than $14 billion from investors to settle all claims.
Jared Ellias, a bankruptcy law expert, said it was "nonsensical" for PG&E to make it look like it was reducing its offer to fire victims. Lawyers might realize the company could offer more money eventually, but most victims will be angered. "If you're sitting in one of those trailers people are living in, you might get upset," he said.
In any event, investors welcomed the settlement as a step toward a successful close to the bankruptcy case. PG&E's stock price shot up $1.08 a share, to close at $11.18, on the New York Stock Exchange. Shareholders had soured on PG&E's stock in recent weeks; the company experienced a setback last week when state lawmakers deferred until January action on PG&E's request for state-backed low-interest financing to help it pay wildfire claims.
Insurance companies holding about 85% of all insurance claims have agreed to the settlement announced Friday. The deal pays them a little more than 50 cents on the dollar.
The bloc of insurance companies, in a prepared statement, said: "While this proposed settlement does not fully satisfy the approximately $20 billion in group members' unsecured claims, we hope that this compromise will pave the way for a plan of reorganization that allows PG&E to fairly compensate all victims and emerge from Chapter 11 by the June 2020 legislative deadline."