PG&E to plead guilty on 84 counts of involuntary manslaughter ahead of bankruptcy court decision

Dive Brief:

Pacific Gas & Electric is expected to plead guilty today to 84 counts of involuntary manslaughter related to the 2018 Camp Fire.
The proceeding, in California's Butte County Superior Court, will begin at 1:30 pm ET. It is expected to continue on Wednesday and Judge Michael Deems will likely hand down a sentence on Thursday or Friday, Associated Press reports.
The hearing will play out as PG&E works to finalize its exit from bankruptcy ahead of a June 30 deadline for participating in California's wildfire insurance fund. U.S. Bankruptcy Judge Dennis Montali is now considering whether to approve the utility's Chapter 11 reorganization plan.

Dive Insight:

The hearing today comes almost three months after PG&E reached a plea deal with the district attorney of California's Butte County. Investigators concluded the Camp Fire — the most destructive wildfire in state history — was sparked by a PG&E transmission line.

Butte County District Attorney Mike Ramsey plans to show photographs of all the people killed in the deadly fire, according to AP. "We want this to be impactful because this can't go on any longer," he told the news outlet.

Along with the involuntary manslaughter pleas, PG&E is expected to plead guilty to a single felony count of unlawfully causing a fire. The utility agreed to pay around $4 million in fines and fund water provisions for communities that relied on a canal destroyed in the fire.

While there have been objections to PG&E's reorganization plan, experts say a rejection by Montali could delay payments to fire victims by months or years. The California Public Utilities Commission (CPUC) unanimously approved the plan in May.

Some fire victims have criticized the plan, however, saying it fails to address PG&E's larger exposure to wildfire risk.

The proposal contains $25.5 billion to resolve PG&E's fire liabilities, including a $13.5 billion fund to compensate victims, which will comprise equal parts cash and company stock.

California's approval of the plan included a six-step oversight process, which would allow the commission under specific circumstances to revoke PG&E's authority to operate. The measures in the decision have been designed to ensure PG&E will exit bankruptcy as a fundamentally changed company, California regulators said in a statement.

PG&E's financial position could improve if California regulators approve a general rate case settlement that the utility and major parties agreed to in December, Fitch said in a ratings action commentary on Monday.

If the settlement is approved by the CPUC, PG&E rates would increase $575 million, $318 million and $367 million in 2020, 2021 and 2022, respectively. "A final CPUC decision approving the proposed settlement would be a constructive credit development," the ratings agency said.

Fitch assigned Long-Term Issuer Default Ratings of BB to PG&E Corp. and its utility subsidiary, with a stable outlook.