(Bloomberg) -- More than 110 Northern California city and county officials representing the majority of bankrupt PG&E Corp.'s customers are proposing to turn the utility giant into a customer-owned cooperative.
The coalition led by the city of San Jose includes officials from 58 cities and 10 counties who altogether represent more than 8 million residents, according to a statement from San Jose Mayor Sam Liccardo. The group is proposing, among other things, to continue managing PG&E's expansive territory as a single system, honor existing power and labor contracts and have a board overseeing the co-op set customer rates.
“With these principles, we've presented a framework for a viable customer-owned PG&E that will be transparent, accountable, and equitable,” said Liccardo, who has spent weeks getting local officials behind the idea of a cooperative. He didn't detail how the governments would finance a takeover, but a consultant for the group said bonds would be issued to cover much of the cost.
Calls for a takeover of San Francisco-based PG&E have intensified since the company filed for bankruptcy in January amid billions of dollars in liabilities tied to wildfires that its equipment ignited. The latest proposal comes as PG&E's shareholders and creditors are jostling over control of the state's largest utility in bankruptcy court.
Takeover Threat
PG&E has been trying for months to come up with a viable restructuring plan that would settle its fire liabilities and have the reorganized utility emerging from Chapter 11 by a state-imposed deadline of June 30, 2020. California Governor Gavin Newsom has threatened a state takeover if the company doesn't come up with a plan soon.
Read More: California Governor Newsom Fielding More PG&E Takeover Calls
San Francisco has been trying to buy PG&E's equipment within the city's limits for $2.5 billion, an offer the company has rejected. Backers of the co-op proposal are taking a notably different approach, saying they want to keep the company's service territory intact to ensure that residents of rural, fire-prone areas don't face a steep increase in costs.
The co-op would still be subject to all of California's requirements for increasing the use of renewable power, as well as the state's open-records law, according to the new guidelines.
To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net;David R. Baker in San Francisco at dbaker116@bloomberg.net
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Aaron Clark
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