PG&E Corporation and Pacific Gas and Electric Company (PG&E) has paid an $11 billion settlement to resolve all insurance subrogation claims arising from the 2017 Northern California wildfires and the 2018 Camp Fire.
The utility completed its settlement after receiving court approval for its Chapter 11 Plan of Reorganization last month.
The plan was first announced in September 2019 after investigations found that the utility’s equipment was responsible for igniting a series of major wildfires over the previous two years.
The company filed for bankruptcy protection in January 2019 in anticipation of the massive liabilities it faced from the Camp Fire, which became the deadliest blaze on record.
Now, following court approval, PG&E has concluded the 11 billion of subrogation and related payments to re/insurers, as well as the other agreements that make up the roughly $25.5 billion settlement package.
At the same time, emerging from bankruptcy means that PG&E has also been able to join the California Wildfire Fund, which is administered by the CEA. PG&E has deposited approximately $5 billion in the Fund, representing its initial and first annual contributions.
Recent reports have suggested that the California Wildfire Fund had been looking to place a reinsurance program in the region of $2 billion. But with the addition of PG&E, it seems likely that the Fund will have to significantly expand its reinsurance coverage.
“Today’s announcement is significant for PG&E and for the many wildfire victims who are now one step closer to getting paid,” said Interim Chief Executive Officer, PG&E Corporation, Bill Smith.
“Compensating these victims fairly and quickly has been our primary goal throughout these proceedings, and I am glad to say that today we funded the Fire Victim Trust for their benefit,” he continued.
“This is an important milestone, but our work is far from over. Our emergence from Chapter 11 marks just the beginning of PG&E’s next era—as a fundamentally improved company and the safe, reliable utility that our customers, communities and California deserve.”
Among the other agreements in PG&E’s $25.5 package are a $1 billion settlement to satisfy the wildfire claims of certain cities, counties, and other public entities, and a $13.5 billion settlement resolving claims by individual victims and others relating to the 2015 Butte Fire, 2017 Northern California Wildfires, and the 2018 Camp Fire.
It’s thought that the subrogation settlement could cascade down through the market, to benefit some companies and reduce their ultimate losses from some of the wildfires