A bill to let a troubled California utility borrow money tax-free so it can pay victims of wildfires started by its equipment will not pass this year.
PG&E is facing potentially $30 billion worth of damages from a series of devastating wildfires in recent years, including one that killed 86 people and mostly destroyed the town of Paradise last year.
The fires were found to be started by PG&E’s equipment, including power lines that toppled from strong winds. Under California law, that makes PG&E liable for damages.
The company filed for bankruptcy earlier this year, which has pitted shareholders against bondholders for control of the company. Shareholders control the company now. Bondholders, which include some of the biggest investors on Wall Street, hold most of the company’s debt.
A group of the company’s largest shareholders have pushed for legislation that would let the California Infrastructure and Economic Development Bank issue tax exempt bonds on behalf of the company, borrowing against PG&E’s future profits.
Supporters of the plan say shareholders — not the utility company’s customers — would be responsible for paying off the loan. Taxpayers would not have to pay off the loan if the shareholders default.
Shareholders hope the proposal would strengthen their efforts to resist a proposal by the bondholders to buy the company. Their lobbying efforts, which included a visit to the state Capitol by PG&E CEO Bill Johnson last month, have focused on the bonds being a quick way to pay victims while also protecting the value of current investors — which include the state’s largest pension funds covering state workers and teachers.
Bondholders oppose the plan because it would saddle the company with more debt. They also argue that the state government would lose billions of dollars in revenue because the bonds are tax-exempt.
Assemblyman Chad Mayes (R-Yucca Valley) succeeded in getting the proposal introduced in the Legislature, overcoming various procedural hurdles in the waning days of the session. But Friday he announced that the bill would not get a vote this year because “there is not sufficient time left for proper debate.”
He also acknowledged that the bill had trouble in the Legislature for its close association with PG&E at a time when many lawmakers don’t want to be seen as bailing out an unpopular company. Mayes said the bill would apply to all of the state’s investor-owned utilities, not just PG&E.
“We shouldn’t be picking teams,” Mayes said. “The purpose of it was not to be about one particular company. It should have been about the policy itself and having this tool in place.”
Steven Maviglio, spokesman for the shareholders, said the group was encouraged by the support the proposal received this year, but added “the timing was simply not right to pass this legislation with just days left in the session.”
“We will return in January with a renewed effort to getting this beneficial legislation the full and fair consideration it deserves,” Maviglio said.
A spokesman for the bondholders declined to comment.
Starting in January will give PG&E shareholders more time, but they still face a tight schedule. Earlier this year, the Legislature set up a fund to help investor-owned utilities pay victims of future wildfires. But to participate, PG&E must exit bankruptcy and settle its pending lawsuits with wildfire victims by June 30.
PG&E spokeswoman Lynsey Paulo said the company “firmly believes that Wildfire Victim Recovery Bonds are a critical element to the state’s path forward when it comes to addressing wildfire risk.”