(Bloomberg) -- An effort by bankrupt utility giant PG&E Corp. to gain access to tax-free state bonds to help it pay for billions of dollars in wildfire liabilities has run aground in the California legislature.
Lawmakers ran out of time to debate the measure, which would have let PG&E use future profits to finance up to $20 billion in bonds that would help cover damages tied to wildfires that its equipment ignited, according to the bill's sponsor, Republican Assemblyman Chad Mayes. A group of PG&E shareholders plan to push for it to be reintroduced in January, their spokesman said.
“There was no time to fully sort this thing out,” Mayes said during a briefing with reporters Friday. “We have to make sure it goes through the transparency and sunlight of the legislative process.”
PG&E shares fell as much as 5.5% to $9.98.
The bill's defeat comes just three days before PG&E is due to file its Chapter 11 reorganization plan in bankruptcy court. The San Francisco-based power company had left open the possibility that the bonds could be a significant piece of its restructuring, a draft term sheet obtained by Bloomberg News showed.
PG&E's chief executive officer, Bill Johnson, personally lobbied lawmakers to support the legislation as a way for the company to quickly to pay for fire claims that pushed it into bankruptcy in January.
“We firmly believe that wildfire victim recovery bonds are a critical element to the state's path forward when it comes to addressing wildfire risk,” PG&E said in a statement. “We're pleased to see policymakers acknowledge the merits of this proposal and look forward to lawmakers considering it in January as a balanced approach that prioritizes and protects both wildfire victims and customers.”
The measure faced an uphill battle from the start. A group representing wildfire victims, Up From the Ashes, said it couldn't support the bill unless PG&E reached a settlement with fire victims.
Some lawmakers, consumer advocates and a powerful group of PG&E creditors, including Pacific Investment Management Co. and Elliott Management Corp., also opposed it. The group waged a lobbying campaign against the bill, calling it a “bailout” for PG&E's shareholders.
The creditors have pushed their own PG&E reorganization plan that would hand them control of the company.
To contact the reporter on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Joe Ryan, Pratish Narayanan
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