Fund for PG&E wildfire victims in California could be $2.5 billion short, trustee warns
Fluctuations in PG&E Corp.’s stock price have left the fund established to pay wildfire victims more than $2 billion short, the man overseeing the payouts said Wednesday.
Retired appeals court Justice John Trotter, in a letter to more than 70,000 wildfire victims, warned it’s possible the low stock price could mean they receive less than full value for their claims. He said he’s asked the Legislature and Gov. Gavin Newsom’s office to see if anything can be done to rectify the potential shortfall.
“The Fire Victim Trust members are looking at potential recoveries of less than 100% of their promised settlement because of PG&E’s stock value,” he wrote.
The settlement plan, which was approved by wildfire victims in a vote taken last year, was designed to pay a total of $13.5 billion, covering uninsured losses from a string of mega-fires capped by the 2018 Camp Fire in Butte County. The plan was concocted as part of PG&E’s bankruptcy case.
PG&E funded the trust half in cash and half in new shares of company stock. The victims won’t actually receive stock; instead, the shares will be sold for cash.
PG&E shares closed Wednesday at $9.21 on the New York Stock Exchange.
That leaves those shares for the Victim Trust worth just under $4.4 billion, or about $2.4 billion short of where they need to be. Trotter’s letter put the estimated shortfall at $2.5 billion.
In January, when the stock price was at $11 a share, he said the gap could be $1 billion. The price then rose to nearly $12 in the spring before tumbling as wildfires started burning, including one — the Dixie Fire — linked to PG&E’s equipment.
Trotter acknowledged that victims will feel like they’re being treated unfairly. Under AB 1054, a bill signed into law by Newsom in 2019, victims of new fires caused by PG&E — that is, fires that occurred in 2019 or later — will get full value for their claims through a special state-run insurance fund.
The legislation “left out those already harmed,” Trotter wrote. “I have asked representatives of the legislative and executive branches to join with me in a working group to address what, if anything, can be done to ameliorate the unintended but real disparate treatment of the victims of PG&E’s fires.”
Several major fires linked to PG&E have occurred since the legislation was signed — including the October 2019 Kincade Fire in Sonoma County and this year’s Dixie Fire, the second-largest fire in California history and still burning in and around the Plumas National Forest. The company has said its losses from the Kincade Fire alone could top $600 million.
Trotter has been criticized by some victims over the time it’s taken to pay out money. So far the fund has cut checks totaling $739.9 million.
This story was originally published September 2, 2021 at 5:00 AM with the headline "Fund for PG&E wildfire victims in California could be $2.5 billion short, trustee warns."