Bankruptcy Should Have Consequences

The Mayor of San Jose is proposing that PG&E's bankruptcy should be resolved by turning it into a customer owned utility:

Frustrated by PG&E Corp.’s California blackouts and its existing options for exiting bankruptcy, the mayor of the state’s third-biggest city is proposing something radically different: turn the company into the nation’s largest customer-owned utility.

San Jose hopes to persuade other California cities and counties in coming weeks to line up behind the plan, which would strip PG&E of its status as an investor-owned company and turn it into a nonprofit electric-and-gas cooperative, Mayor Sam Liccardo said in an interview.

The buyout proposal by San Jose, the largest city served by PG&E with more than a million residents, amounts to a revolt by some of the utility’s roughly 16 million customers as PG&E struggles to keep the lights on and provide basic services while preventing its aging electric equipment from sparking wildfires.

Mr. Liccardo said the time has come for the people dependent on PG&E for essential services to propose a new direction. A cooperative, he said, would create a utility better able to meet customers’ needs because it would be owned by customers—and answerable to them.

“This is a crisis begging for a better solution than what PG&E customers see being considered today,” Mr. Liccardo said. He said recent power shut-offs initiated by the company were poorly handled, adding, “I’ve seen better organized riots.”

………

The buyout idea represents a dramatic twist in the debate over how PG&E can emerge from bankruptcy, compensate fire victims and address its many safety problems. It likely will face stiff opposition from PG&E, which in January filed for chapter 11 protection from an estimated $30 billion in wildfire-related liabilities. The company’s bondholders also will likely contest the idea after putting forward a rival reorganization plan that the bankruptcy court agreed to consider.

Instead of taking their proposal to the bankruptcy court weighing PG&E’s fate, proponents say public entities will likely take their case directly to the California Public Utilities Commission, which can veto a reorganization plan emerging from bankruptcy review if in its eyes it doesn’t serve the public interest.

PG&E has been so awful for so long, I really do not see an alternative to this.

As an aside, a bankruptcy might very well prevent them from opening their pocket book to bankroll a initiative petition campaign against any public ownership proposals.