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COM/ /mph PROPOSED DECISION Agenda ID #17715

Decision __________ 

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation on the 

Commission's Own Motion to Consider 

the Ratemaking and Other Implications 

of a Proposed Plan for Resolution of 

Voluntary Case filed by Pacific Gas and

Electric Company Pursuant to 

Chapter 11 of the Bankruptcy Code, in 

the United States Bankruptcy Court, 

Northern District of California, San 

Francisco Division, In re Pacific Gas and 

Electric Corporation and Pacific Gas and 

Electric Company, Case No. 19-30088.

FILED

PUBLIC UTILITIES COMMISSION

__________________, 2019

SAN FRANCISCO, CALIFORNIA

INVESTIGATION __-__-___

ORDER INSTITUTING INVESTIGATION 

Summary 

This Order opens an investigation into the ratemaking and other 

implications for Pacific Gas and Electric Company (PG&E) that will result from 

the confirmation of a plan of reorganization and other regulatory approvals 

necessary to resolve PG&E’s voluntary case filed pursuant to Chapter 11 of the 

Bankruptcy Code in the United States Bankruptcy Court, Northern District of 

California, San Francisco Division, In re Pacific Gas and Electric Corporation and 

Pacific Gas and Electric Company, Case No. 19-30088. 

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We initiate this Order Instituting Investigation (OII) to afford parties the 

opportunity to be heard and comment on any California Public Utilities 

Commission (Commission) regulatory review resulting from a proposed plan of 

reorganization (including any amendments) filed with the Commission, any 

proposed settlement agreement resolving PG&E’s Chapter 11 case between 

PG&E and Commission staff filed in connection with a plan, any regulatory 

approvals required pursuant to Public Utilities Code Section 3292 in order for 

PG&E to become eligible to participate in the wildfire fund established pursuant 

to Assembly Bill 1054 (AB) 1054, any other regulatory approvals required by 

AB 1054, and any other matters that may need to be decided by this Commission 

in connection with a plan. 

The Commission expects to render its decision sufficiently in advance of 

the June 30, 2020 statutory deadline contained in AB 1054 to allow the 

Bankruptcy Court to address and approve any modifications made to the plan 

pursuant to Commission orders. This OII will provide the Commission with a 

venue for review of a proposed plan and all attendant issues identified as within 

the scope of this proceeding. 

1. Background 

On January 29, 2019, Pacific Gas and Electric Company (PG&E) and its 

holding company, PG&E Corporation (PG&E Corp.) (jointly Debtors), filed 

voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United 

States Bankruptcy Court for the Northern District of California. These filings 

followed a series of devastating wildfires that occurred in the fall of 2017 and 

2018, including fires connected to PG&E-owned infrastructure for which PG&E’s 

liability is expected to be in the tens of billions of dollars. At the outset, is it 

important for this Commission to acknowledge the devastation caused by these 

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fires and the tragic losses suffered by Californians in these catastrophes. PG&E 

and PG&E Corp. now face the challenge of fairly and quickly compensating 

wildfire victims as part of any plan for reorganization in the Chapter 11 case to 

allow the Debtors to exit bankruptcy. 

The Governor of the State of California and the Legislature, by enacting 

AB 1054 (Ch. 79, Stats. 2019), have acted quickly and decisively to implement 

long-term, going forward solutions for addressing risks of utility-caused 

wildfires. One element of this multi-faceted solution established a wildfire fund 

to pay eligible claims to victims in advance of Commission proceedings to 

determine cost recovery of wildfire costs and expenses. All three of California’s 

Investor Owned Utilities (IOUs), including PG&E, have provided notice and 

taken the requisite steps to participate (or in PG&E’s case to become eligible to

participate) in the Wildfire Insurance Fund established by Public Utilities (Pub. 

Util.) Code Section 3292.1 On August 26, 2019, the Bankruptcy Court issued an 

order authorizing PG&E to participate in the Wildfire Insurance Fund and to 

make contributions to the fund.2

In addition to establishing the fund, AB 1054 lists a number of additional 

Bankruptcy Court and regulatory determinations that must be made by 

June 30, 2020 in order for PG&E to participate in the Wildfire Insurance Fund. 

 

1 Given the timely payment of initial contributions made by Southern California Edison 

Corporation (SCE) and San Diego Gas & Electric Company (SDG&E), the Wildfire Insurance 

Fund is operative and the alternative wildfire liquidity fund provided by Pub. Util. Code 

section 3291 is inoperative. See Pub. Util. Code section 3291(g), SCE’s Notice re Initial 

Contribution to the California Wildfire Fund filed in Rulemaking (R.)19-07-017 (Sept. 11, 2019), 

and Notification of SDG&E’s Initial Contribution to the Wildfire Fund (Sept. 11, 2019) filed in 

R.19-07-017. 

2 If PG&E meets the criteria for participation, PG&E’s initial and annual contributions to the 

fund become due on the date that PG&E exits its insolvency proceeding. Pub. Util. Code 

Section 3292(e). 

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The Commission must approve a plan of reorganization resolving PG&E’s 

insolvency proceedings and make determinations as to the acceptability of such 

plan in light of factors relating to safety, California’s climate goals, and ratepayer 

impacts, among other things.3 In this proceeding we will address issues relevant 

to our consideration of all regulatory determinations necessary for PG&E to 

become eligible to participate in the fund. 

On September 9, 2019, PG&E and PG&E Corp. filed a Chapter 11 Plan of 

Reorganization with the Bankruptcy Court.4 This Commission has previously 

navigated the landscape of bankruptcy court and state regulatory issues germane 

to a potential approval of plan of reorganization. In the first PG&E bankruptcy, 

Commission Staff5 and PG&E filed a proposed settlement agreement (following 

many months of contentious proceedings) that addressed a plan of 

reorganization, regulatory issues, and other conditions imposed on PG&E by the 

proposed settlement.6 In its opinion approving a modified settlement agreement, 

the Commission noted the fundamental differences between the role of 

Commission proceedings and the Bankruptcy Court: while the Commission 

regulates the relationship between public utilities and their ratepayers, the 

Bankruptcy Court is mostly concerned with the relationship between the debtor 

and its creditors.7 The Bankruptcy Code further explicitly recognizes that utility 

ratemaking is the province of governmental regulatory commissions, such as this 

 

3 Pub. Util. Code Sections 3929(C), (D), (E). 

4 Debtors’ Joint Chapter 11 Plan of Reorganization, Case: 19-30088, Doc# 3841 (Sept. 9, 2019), 

available at https://restructuring.primeclerk.com/pge/. 

5 Commission Advisory Staff and outside counsel represented the Commission in Bankruptcy 

Court in PG&E’s prior bankruptcy.

6 D.03-12-035. 

7 Id. at 22. 

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Commission, and provides that any rate change in a reorganization plan must be 

approved by the governmental regulatory commissions with proper 

jurisdiction.8 In this proceeding the Commission will resolve issues relating to 

the ratemaking implications of PG&E’s, or any relevant alternative proposed 

plan of reorganization, as well as any settlement agreement that may be reached 

in connection with a plan. 

The current plan of reorganization is not sufficiently advanced through the 

Bankruptcy Court process for the Commission to consider at this time; however, 

PG&E’s reorganization plan contains an outline of how the Debtors propose to 

structure their exit from bankruptcy. Part of that plan identifies additional 

Commission approvals necessary as a condition to a plan confirmation (beyond 

the statutory findings required for PG&E to participate in the Wildfire Insurance 

Fund).9 Other Commission approvals that the Debtors identify as required for 

plan confirmation could include authorizing PG&E’s cost of capital (return on 

equity) and capital structure currently under consideration in the Cost of Capital 

proceeding, satisfactory resolution of other Commission investigations pending 

against PG&E for pre-petition conduct that are being considered in other OIIs, 

approval of PG&E’s corporate governance structure and disposition of proposals 

to change PG&E’s corporate structure currently under consideration in PG&E’s 

Safety Culture Proceeding, and approvals for the financing structure and 

hedges.10 The Commission may resolve in this proceeding issues pending in 

 

8 Id. at 23 (quoting In re Cajun Elec. Power Co-op., Inc. (5th Cir. 1999) 185 F.3d 446, 453). 

9 PG&E Plan at section 1.32. 

10 See Summary of Key Elements of Debtors’ Joint Chapter 11 Plan of Reorganization Dated 

September 9, 2019, Case: 19-30088, Doc# 3844 at 7 (Sept. 9, 2019). 

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other Commission proceedings as necessary for the timely confirmation and 

implementation of a proposed plan. 

The provisions of AB 1054 relating to PG&E’s eligibility to participate in 

the wildfire fund as the going-forward solution established by AB 1054 require a 

short turnaround time for PG&E, the Bankruptcy Court, and the Commission to 

review and approve a plan and other documents resolving PG&E’s insolvency 

proceeding in order to meet the June 30, 2020 statutory deadline. This 

proceeding will move quickly particularly given our preliminary determination 

that evidentiary hearings will be necessary. Parties must be prepared to act on 

short deadlines and be as cooperative and forthcoming as possible so we can 

meet the legislative deadline for facilitating PG&E’s eligibility to participate in 

the Wildfire Fund, consistent with due process and our consideration of the 

issues. 

2. Preliminary Scoping Memo

The Commission will conduct this OII in accordance with Article 5 of the 

Commission's Rules of Practice and Procedure.11 Consistent with Rule 7.1, this 

OII includes a preliminary scoping memo, and preliminarily determines the 

category of this proceeding and the need for hearing. 

2.1. Issues

The scope of this proceeding shall include all issues raised in this order, 

but will not necessarily be limited to these issues. 

The preliminary issues to be addressed are: 

 

11 All references to “Rules” are to the Commission’s Rules of Practice and Procedure unless 

otherwise indicated. 

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1. Whether it is reasonable to approve a proposed plan of reorganization 

submitted by PG&E and PG&E Corp., and any related plan 

amendments, or any other relevant plan of reorganization that may be 

submitted for the Commission’s approval, and any related proposed 

settlement agreement or other documents, taking into consideration: 

a. The ratemaking implications of such proposed plan 

and settlement agreement; 

b. Whether the proposed plan and settlement 

agreement provide satisfactory resolution of claims 

for monetary fines or penalties for PG&E’s 

pre-petition conduct; 

c. Whether to approve a governance structure for the 

utility, and the appropriate disposition of potential 

changes to PG&E’s corporate structure and 

authorizations to operate; 

d. Whether it is reasonable and appropriate for the 

Commission to make any other approvals related to 

the confirmation and implementation of the 

proposed plan; and 

e. Any other findings relevant for the Commission to 

approve a proposed settlement agreement, including 

whether such settlement is in the public interest. 

2. Whether the Commission should make the following determinations 

for a Commission-approved reorganization plan and other documents 

resolving the insolvency proceeding: 

a. PG&E’s governance structure resulting from the 

plan is acceptable in light of PG&E’s safety history, 

criminal probation, recent financial condition, and 

other factors deemed relevant by the Commission; 

b. The plan is consistent with the state’s climate goals 

pursuant to the California Renewables Portfolio 

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Standard Program and related procurement 

requirements of the state; 

c. The plan is neutral, on average, to PG&E’s 

ratepayers; and 

d. The plan recognizes the contributions of PG&E’s 

ratepayers, if any, to resolving the insolvency 

proceeding and compensates them accordingly 

through mechanisms approved by the Commission. 

3. Categorization; Ex Parte Communications; 

Need for Hearing 

Pursuant to Rule 7.1 of the Commission’s Rules of Practice and Procedure 

we preliminarily determine that this proceeding is categorized as ratesetting. 

Accordingly, ex parte communications are subject to the restrictions and 

reporting requirements set forth in Article 8 of the Rules. We preliminarily 

determine that hearings will be necessary. 

3.1. Preliminary Schedule

PG&E, as the respondent to this OII, is to file and serve a response to this 

OII that includes its most current public plan of reorganization, including any 

amendments or other modifications. Other persons or entities who wish to 

become parties to this proceeding may subsequently file and serve responses to 

the OII, which may also address PG&E’s response to the OII. Any responses to 

PG&E’s response should focus on procedural and scheduling issues, not on the 

substance or contents of PG&E’s plan of reorganization. 

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The preliminary schedule for this proceeding is: 

SCHEDULE 

EVENT DATE

PG&E to file and serve a response to the OII. October 7, 2019 

Other responses to the OII filed and served. October 14, 2019 

Prehearing Conference

October 23, 2019 at 10:00 a.m., 

Commission Courtroom, 

505 Van Ness Avenue, 

San Francisco, California, 

94102

The prehearing conference (PHC) will be held for the purposes of 

(1) taking appearances, (2) discussing schedule and process, and (3) informing 

the scoping memo. The PHC shall be held on October 23, at 10:00 a.m. at the 

Commission Courtroom, 505 Van Ness Avenue, San Francisco, California, 94102. 

This schedule may be modified by the assigned Commissioner or Administrative 

Law Judge (ALJ) as needed to promote the fair and efficient resolution of this 

proceeding. The scoping memo will determine the schedule and the issues to be 

addressed. Preliminarily, we expect hearings to be conducted in this proceeding 

and that hearings will commence no later than February 2020. 

If there are any workshops or other public meetings in this proceeding, 

notice of such workshops will be posted on the Commission’s Daily Calendar to 

inform the public that a decision-maker or an advisor may be present at those 

meetings or workshops. Parties shall check the Daily Calendar regularly for such 

notices. 

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4. Respondents 

PG&E is named as respondent to this proceeding. Pursuant to Rule 5.2 

PG&E is directed to respond to this Order Instituting Investigation on 

October 7, 2019 and its response shall include the following information: 

1. PG&E and PG&E Corp.’s most current public plan of reorganization, 

including any amendments or other modifications. 

2. A table summarizing the major actions and expected timelines for: 

 The Bankruptcy Court’s consideration of the Debtors’ 

proposed plan, including any additional approvals that 

may be necessitated by a Commission order modifying the 

plan. 

 The U.S. District Court’s completion of estimation 

proceedings for wildfire claims. 

 Trials in the Superior Court of California on claims arising 

from the Tubbs fire. 

5. Service 

This OII shall be served on respondent PG&E. 

In addition, in the interest of broad notice, this OII will be served on the 

official service lists for the following proceedings: 

I.19-06-015 – PG&E Electric Facilities Investigation 

I.18.12-007 – PG&E Locate and Mark Investigation 

I.18-07-008 – PG&E Electric Disconnection Investigation 

I.15-11-015 – PG&E Ex Parte and Rule 1.1 Investigation 

I.15-08-019 – PG&E Safety Culture Investigation 

I.02-04-026 – PG&E Bankruptcy (2002) Investigation 

R.19-01-006 - Wildfire Cost Recovery Rulemaking 

A.19-04-015 – PG&E 2020 Cost of Capital Application 

A.18-12-009 - PG&E 2020 General Rate Case Application 

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A.18-11-001 – PG&E Debt Securities Application 

A.18-10-003 - PG&E Short-Term Financing Application 

Service of the OII does not confer party status or place any person who has 

received such service on the official service list for this proceeding, other than 

respondent. Instructions for obtaining party status or being placed on the official 

service list are given below. 

6. Filing and Service of Comments 

and Other Documents

Filing and service of comments and other documents in the proceeding are 

governed by the Commission’s Rules of Practice and Procedure. 

7. Addition to Official Service List 

Addition to the official service list is governed by Rule 1.9(f) of the 

Commission’s Rules of Practice and Procedure. 

Respondent is a party to the proceeding (see Rule 1.4(d)) and will be 

immediately placed on the official service list. 

Any person will be added to the “Information Only” category of the 

official service list upon request, for electronic service of all documents in the 

proceeding, and should do so promptly in order to ensure timely service of 

comments and other documents and correspondence in the proceeding. (See

Rule 1.9(f).) The request must be sent to the Process Office by e-mail 

(process_office@cpuc.ca.gov) or letter (Process Office, California Public Utilities 

Commission, 505 Van Ness Avenue, San Francisco, California 94102). Please 

include the Docket Number of this investigation in the request. 

Persons who file responses to this OII become parties to the proceeding 

and will be added to the “Parties” category of the official service list upon such 

filing. In order to assure service of comments and other documents and correspondence 

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in advance of obtaining party status, persons should promptly request addition to the 

“Information Only” category as described above; they will be removed from that 

category upon obtaining party status. 

8. Subscription Service 

Persons may monitor the proceeding by subscribing to receive electronic 

copies of documents in this proceeding that are published on the Commission’s 

website. There is no need to be on the official service list in order to use the 

subscription service. Instructions for enrolling in the subscription service are 

available on the Commission’s website at http://subscribecpuc.cpuc.ca.gov/. 

9. Intervenor Compensation 

Intervenor Compensation is permitted in this proceeding. Any party that 

expects to claim intervenor compensation for its participation in this 

Investigation must file a timely notice of intent to claim intervenor 

compensation. (See Rule 17.1(a)(2).) Intervenor compensation rules are governed 

by sections 1801 et seq. of the Public Utilities Code. Parties new to participating 

in Commission proceedings may contact the Commission’s Public Advisor.

10. Public Advisor

Any person or entity interested in participating in this investigation who is 

unfamiliar with the Commission’s procedures should contact the Commission’s 

Public Advisor in San Francisco at (415) 703-2074 or (866) 849-8390 or e-mail 

public.advisor@cpuc.ca.gov. The TTY number is 1-(866) 836-7825. 

Therefore, IT IS ORDERED that: 

1. This Order Instituting Investigation is adopted pursuant to Rule 5.1 of the 

Commission’s Rules of Practice and Procedure.

2. Pacific Gas and Electric Company is the respondent to this Order 

Instituting Investigation. 

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3. Pacific Gas and Electric Company shall file and serve a response to this 

Order Instituting Investigation no later than October 7, 2019. 

4. Other persons or entities may file and serve responses to this Order 

Instituting Investigation no later than October 14, 2019. 

5. The preliminary categorization is ratesetting. 

6. The preliminary determination is that a hearing is needed. 

7. The preliminarily scope of issues is as stated above. 

8. The preliminary schedule for this proceeding is set forth above. 

9. A prehearing conference is set for October 23, 2019 at 10:00 a.m. at the 

Commission Courtroom, 505 Van Ness Avenue, San Francisco, CA 94102. 

10.The Executive Director will cause this Order Instituting Investigation to be 

served on the respondent and on the service lists for the following Commission 

proceedings: I.19-06-015, I.18.12-007, I.18-07-008, I.15-11-015, 

I.15-08-019, I.02-04-026, R.19-01-006, A.19-04-015, A.18-12-009, 

A18-11-001, A18-10-003. 

11.Any party that expects to claim intervenor compensation for its 

participation in this proceeding must timely file its notice of intent to claim 

intervenor compensation. (See Rule 17.1.) 

 This Order is effective today. 

 Dated ________________________________, San Francisco, California. 

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