California Considers If PG&E Penalty Is Worth Bankruptcy
By Mark Chediak - Aug 21, 2013 10:48 AM ET .
California regulators must weigh whether a $2.25 billion penalty for safety lapses is worth potentially pushing PG&E Corp. (PCG), owner of the state’s largest utility, into bankruptcy for the second time in 12 years.
PG&E expects the California Public Utilities Commission to decide by the end of this year on a punishment for a September 2010 natural gas pipeline explosion that killed eight people. Imposing the staff’s proposed penalty may force the company into bankruptcy if it can’t sell enough shares to pay for it, Chairman and Chief Executive Officer Tony Earley said in an interview yesterday at Bloomberg headquarters in New York.
“If the purpose was to get the company’s attention, you have the company’s attention,” said Earley, who took over a year after the accident. A $2.25 billion penalty would bring PG&E’s total tab for the disaster to $4 billion, including money already spent on pipeline upgrades and safety work, Earley said. The San Francisco-based company has asked regulators to credit money already spent against any fine imposed.
Moody’s Investors Service and Standard & Poor’s have said they will review California’s regulatory system if the full penalty is assessed. PG&E put its utility unit into bankruptcy in 2001 after amassing $9 billion in debt when electricity costs tripled in the aftermath of the state’s deregulation of power markets and regulators didn’t act quickly enough to raise customer rates.
“Staff made a recommendation regarding a penalty and parties and PG&E provided comments,” Terrie Prosper, a spokeswoman for the commission, said in an e-mail yesterday. “The matter is now in the hands of administrative law judges.”
more:
http://www.bloomberg.com/news/2013-08-20/california-considers-if-pg-e-penalty-is-worth-bankruptcy.html
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