Nov 28, 2019

PG&E bankruptcy judge sides with fire victims in liability challenge

Streaks of lights from vehicles drive along highway 24 during an Oct. 10 PG&E power shutoff in Oakland, Calif. Photo: Ray Chavez/MediaNews Group/The Mercury News via Getty Images

PG&E lost a challenge Wednesday to a California law holding it liable for billions of dollars in wildfire damage connected to its equipment, Bloomberg first reported.

Why it matters: The ruling in the U.S. Bankruptcy Court in San Francisco by Judge Dennis Montali is a victory for victims of the state's 2017 and 2018 wildfires, who are hoping to be awarded damages for their affected properties in the utility’s bankruptcy.

Driving the news: In a January Chapter 11 bankruptcy protection filing, the embattled power giant estimated it was on the hook for $30 billion dollars in liability costs for the fires.

What's new: PG&E said it shouldn’t be subject to the "inverse condemnation" legal doctrine that "holds utilities strictly liable for covering the costs of blazes linked to their equipment — regardless of whether they were negligent," Bloomberg notes, because investors own the firm, not taxpayers. But the judge sided with the fire victims.

  • The utility and fire victims are holding discussions on a chapter 11 plan that could pay them about $13.5 billion, but they're "still preparing to litigate over whether PG&E is legally liable and how much it will have to pay," the Wall Street Journal.
  • The company was also defeated in its "attempts to get aid" from Sacramento and California lawmakers "refused PG&E’s attempts to change how the doctrine is applied, which might have reduced the amount of damages it must pay," the WSJ noted.

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