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PG&E CORPORATION

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PG&E : Reaches $1 Billion Settlement With Paradise, California Governments--Update

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06/18/2019 | 08:01pm EDT

By Katherine Blunt and Erin Ailworth

PG&E Corp. has agreed to pay $1 billion to compensate more than a dozen California cities, counties and agencies for losses resulting from deadly wildfires sparked by its equipment.

The agreement with local governments marks the first major settlement since PG&E sought bankruptcy protection in January. The company has estimated it could face more than $30 billion in potential liability costs resulting from fires in 2017 and 2018.

Paradise, the town that was destroyed in last year's Camp Fire, which killed 85 people, would receive $270 million, the most of any entity within the group. Butte County, where the fire occurred, would receive $252 million. A group of local governments in California's wine country, site of a devastating series of fires in 2017, would share $415 million.

The agreement is subject to approval in bankruptcy court and doesn't affect claims from individuals or businesses affected by the fires.

Paradise Mayor Jody Jones said the settlement would allow the town to avoid an expensive trial and proceed more quickly with its reconstruction challenges, though she expected it would take at least a year to receive compensation, pending approval in court.

"It's going to mean so much to the rebuilding and recovery of Paradise," she said. "There's so much infrastructure that we have to put back into the town, there's so much tax revenue that we lost and are not going to get back for years."

California fire investigators have tied PG&E's equipment to 18 fires that swept the wine country region north of San Francisco in 2017, killing 22 people, as well as last year's Camp Fire, California's deadliest fire ever.

The cities and counties that agreed to the settlement will use the money to recoup some disaster-recovery costs related to those wildfires, as well as one in the fall of 2015.

"This is an important first step toward an orderly, fair and expeditious resolution of wildfire claims and a demonstration of our willingness to work collaboratively with stakeholders to achieve mutually acceptable resolutions," PG&E said in a statement.

John Fiske, a Baron & Budd attorney representing the local governments, said they had initially sought well more than $1 billion but declined to specify the amount. PG&E, he added, had sought to pay less than that but was amenable in negotiations.

"It was a compromise amount," he said.

Butte County Counsel Bruce Alpert said the company's bankruptcy filing accelerated settlement discussions with the county.

The county was among the areas where PG&E recently cut off power preemptively during high wind conditions to avoid triggering another fire.

"There are a lot of procedures and lots of delays that can occur in bankruptcy court and we didn't want to get caught in that morass," he said. "It just was a lot simpler to sit down face-to-face or at a mediation to accomplish this result."

Mike Danko, a California trial lawyer who represents about 3,000 fire victims, including many homeowners, said the settlement amount reflected the level of destruction wrought by the wildfires. He noted that PG&E reached a $70 million settlement with the city of San Bruno after a natural gas pipeline exploded there in 2010, killing eight people.

"These are larger numbers, which is appropriate," he said.

He anticipates the company will face more than $30 billion in liability costs as more individuals and businesses come forward seeking compensation. His firm is still in the process of valuing claims.

David Rabbitt, chair of the Sonoma County Board of Supervisors, said he was pleased to reach a settlement.

"There's a collective need to get this behind us," he said, even as he noted that PG&E's bankruptcy means a judge will have the final say.

--Micah Maidenberg contributed to this article.

Write to Katherine Blunt at Katherine.Blunt@wsj.com and Erin Ailworth at Erin.Ailworth@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
PG&E CORPORATION 2.48% 18.45 Delayed Quote.-25.31%
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Financials (USD)
Sales 2019 17 465 M
EBIT 2019 3 206 M
Net income 2019 1 336 M
Debt 2019 24 521 M
Yield 2019 -
P/E ratio 2019 7,16x
P/E ratio 2020 4,32x
EV / Sales2019 1,95x
EV / Sales2020 2,26x
Capitalization 9 595 M
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Jason P. Wells Chief Financial Officer & Senior Vice President
Richard A. Meserve Independent Director
Barbara L. Rambo Independent Director
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