Pacific Gas & Electric (PG&E), California’s largest utility, has announced plans to file for Chapter 11 bankruptcy protection. In doing so, California homeowners affected by the recent wildfires, along with companies that furnish the utility with green energy, will be severely impacted.
According to the Wall Street Journal, PG&E faces more than $30 billion in potential liability costs related to its role in sparking wildfires in recent years.
Beyond complicating homeowner attempts to recover damages, the bankruptcy filing would likely stall the state’s plans to reduce carbon emissions since many of the deals involving PG&E and renewable energy companies will be dissolved.
The Federal Energy Regulatory Commission filing shows that PG&E has $34.5 billion worth of renewable energy contracts for electricity deliveries between now and 2043. The Wall Street Journal reports that it obtained $3.3 billion worth of renewable energy such as wind and solar from a supplier such as ConEd, Inc. and NextEra Energy, Inc.
“Two renewable energy projects have already had their debt ratings downgraded in recent weeks because they rely on PG&E for the bulk of their revenues, including Topaz Solar, owned by Berkshire Hathaway, Inc.,” the Wall Street Journal reports.
According to PV Magazine, it would be foolish to assume any PPA signed with PG&E is safe. Fitch and S&P already downgraded the credit rating of the Topaz Solar project before news of the bankruptcy protection broke.
Though it remains to be seen how these contracts play out since there has never been a situation quite like this. PG&E, and other utilities, have filed for bankruptcy before but never on this scale or involving so many renewable energy mandates.
Perhaps unsurprising, PG&E’s stock price hit a 52-week low of $5.07 Monday, losing half of its value immediately after the utility’s Chapter 11 announcement.
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