California governor calls on Warren Buffett to purchase bankrupt PG&E

Source: By Lynn Freehill-Maye, Utility Dive • Posted: Tuesday, October 29, 2019

As wildfires burn out of control and electricity is switched off to millions, state and industry leaders are floating various ways out for the existentially threatened PG&E. Northern California’s massive Kincade Fire, which PG&E has disclosed began minutes after one of the company’s transmission lines went down, has already engulfed nearly 75,000 acres. At least 3 million PG&E customers have faced power outages, either proactive or wind-caused, as more than a dozen other wildfires also rage around the state.

California regulators announced on Monday the launch of a formal probe into the practice of public safety power shutoffs by utilities during periods of high wildfire risks. Newsom had called for the investigation after a power shutoff event from PG&E impacted 2 million customers, also calling for the utility to offer rebates to residential customers and small businesses.

PG&E — which is going through Chapter 11 bankruptcy after fires tied to its equipment created $30 billion in liabilities for the company in the past two years — has been resisting purchase requests. State legislators and other public officials have been calling for the utility to become public. San Jose’s mayor recently suggested a coordinated buyout among the California cities and counties it serves, while San Francisco’s mayor offered $2.5 billion for its relevant portions of PG&E’s grid. The utility said its facilities were “not for sale.”

Newsom said he would welcome a sale to Buffett’s Berkshire Hathaway.

“We would love to see that interest materialize, in a more proactive, public effort,” Newsom said.

Experts warned that with PG&E’s liabilities situation so fluid, Buffett and his company would have a tough time trying to fix what even bankruptcy courts have not yet been able to sort out. ”It feels a bit like longing for a savior when there isn’t an obvious solution or a cheap solution … there isn’t a white knight,” Jared Ellias, a bankruptcy law expert at the UC Hastings College of Law, told the Sacramento Bee.

The key question is whether Berkshire actually wants to pull together a serious bid for the utility, given the ongoing uncertainty about its future liabilities. While the bankruptcy judge is actively considering the hedge-fund-backed takeover plan from bondholders, Buffett had previously dismissed spring rumors that it was in talks to buy PG&E, and Berkshire has yet to publicly indicate any fresh interest in an acquisition.

Gov. Newsom’s office and Berkshire Hathaway were not available for immediate comment.