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Mike Danko Q&A About PG&E Wildfires

November 21, 2019 Posted In

Attorney Mike Danko gives answers to common questions he hears about PG&E wildfires in California. 

How did we get into this mess?

When properly maintained, electrical equipment is safe and won’t start fires. But years ago, PG&E learned that it was cheaper to pay off those people who lose their property in a PG&E fire than it was to maintain the system properly. Thus, PG&E raised money from ratepayers for system maintenance and upgrades but, instead of using it for the required safety work, paid that money out at corporate bonuses and shareholder dividends. What PG&E did not count on was a changing climate, drought conditions, and bark beetle kill.

In the past, the fires PG&E caused could be put out with relatively minimal damage — a couple of hundred acres and a few homes might burn. Now the PG&E fires, once started, cannot be put out before they destroy entire communities.

Is shutting off power the right thing to do?

It will take at least 10 years to make PG&E’s system safe. Until then, the right thing to do is to shut off power in windy, dry conditions. What is not right is that customers are paying the price for the shutoffs. Customers have already paid for a safe system. But PG&E spent that money on bonuses and shareholder dividends. By being forced to endure shutoffs without being compensated for the losses that result, customers are being asked to pay again.

Why don’t they break up PG&E and sell off the pieces?

The power lines are in such bad shape that, except in areas where there is little wildfire risk — like San Francisco — no one wants to buy PG&E’s equipment. Much of PG&E’s equipment is more of a liability than it is an asset.

Would it help to throw out PG&E’s CEO?

Because PG&E is investor-owned, management’s fiduciary duty is to its shareholders. That means it doesn’t matter who is the helm, a CEO’s first priority will always be profits, not safety.

Does PG&E’s bankruptcy mean victims won’t get paid?

PG&E is not broke — nowhere near it. In fact, PG&E contends that it is has the financial wherewithal to pay all victims for the their loss — 100 cents on the dollar — and still have money left over. At the moment, there is not reason to believe otherwise.

If it has money, why did PG&E file bankruptcy?

You don’t have to be in insolvency to file bankruptcy. Here, PG&E filed bankruptcy because management felt that in bankruptcy court, the company’s total liability to its victims would be less than it otherwise might be. For example, many folks won’t make a claim against PG&E for their loss because they incorrectly believing that PG&E has no money to pay them. Others may be unaware of the very short bankruptcy deadlines and may wait too long to make a claim. Those things add up to big savings for PG&E.

Is it too late to make a claim now?

No. The deadline was in October, but the court has extended it to December 31, 2019.  Get more information about how to file a claim form here.

When will the bankruptcy be over?

PG&E is motivated to exit bankruptcy by June 2020. If it doesn’t get a deal done with the wildfire survivors before then, PG&E will lose access to a $21 billion insurance fund that will protect it from liability for future wildfires.