California's largest power company intends to file for bankruptcy as it faces tens of billions of dollars in potential liability following massive wildfires that devastated parts of the state over the last two years, according to a filing with the Securities and Exchange Commission.
Pacific Gas and Electric Co. said Monday that declaring insolvency is "ultimately the only viable option to restore PG&E's financial stability to fund ongoing operations and provide safe service to customers."
The California wildfires, which have killed dozens of people and destroyed thousands of homes, have led to a surge in insurance claims. PG&E estimates that it could be held liable for more than $30 billion, according to the SEC filing, which does not include potential punitive damages, fines or damages tied to future claims.
The filing comes a day after the company announced the resignation of its chief executive officer, Geisha Williams. PG&E said it was required to give employees at least 15 days advance notice before it filed for bankruptcy protection, which it plans to do "on or about" Jan. 29.
PG&E said as of last week it has about $1.6 billion in "cash or cash equivalents on hand" and is in discussions with "a number of major banks" to secure more than $5 billion to fund its ongoing operations as it seeks bankruptcy protection.
The company said that financial alternatives to bankruptcy would not serve the best interests of PG&E and its shareholders and "would not address the fundamental issues and challenges PG&E faces." Among the many considerations that pushed the company closer to bankruptcy was the need to resolve its potential liabilities, extensive rebuilding efforts and "the significant increase in wildfire risk resulting from climate change," PG&E said.
PG&E's shares plummeted more than 45 percent in premarket trading Monday.