EXHIBIT A 

Case: 19-30088 Doc# 5138-1 Filed: 12/16/19 Entered: 12/16/19 12:44:28 Page 1

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OFFICE OF THE GOVERNOR 

December 13, 2019 

William D. Johnson 

Chief Executive Officer 

PG&E Corporation 

77 Beale Street 

San Francisco, CA 94177 

RE: Draft Amended Plan of Reorganization for PG&E Corporation ("Corp") and 

Pacific Gas and Electric Company (the "Utility" and, collectively with Corp, 

"PG&E") dated as of December 6, 2019 (the "Amended Plan") 

Dear Mr. Johnson: 

Since the day PG&E decided to file tor bankruptcy protection, I have been 

clear about the state's objectives. Californians must have access to safe, 

reliable, and affordable service. Victims and employees must be treated fairly. 

And California must continue to make forward progress on our climate change 

goals. These objectives were codified into law in Assembly Bill 1054 (Holden, 

Chapter 79, Statutes of 2019) and must be satisfied as part of any emergence 

from bankruptcy. 

To facilitate an expeditious resolution of the chapter 11 cases that achieves the 

state's objectives, my office has undertaken a review of the Amended Plan and 

the materials submitted in support of such plan to determine whether, in my sole 

judgment, the Amended Plan and the restructuring transactions contemplated 

therein comply with AB 1054. I appreciate the efforts of the management team 

to provide my office information to assist in that review. 

I have determined that the Amended Plan and the restructuring transactions 

contemplated therein do not comply with AB 1054. ln my judgment, the 

Amended Plan and the restructuring transactions do not result in a reorganized 

company positioned to provide safe, reliable, and affordable service to its 

customers, as required by AB l 054. 

GOVERNOR GAVIN NEWSOM• SACRAMENTO, CA 95814 • (916) 445-2841 

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PG&E's chapter 11 cases punctuate more than two decades of 

mismanagement, misconduct, and failed efforts to improve its safety culture. 

PG&E caused the devastating San Bruno gas pipeline explosion, which killed 8 

people, caused 58 injuries, and destroyed approximately 38 homes. PG&E has 

caused multiple catastrophic wildfires in the last three years, including the 

Camp Fire, which we know killed 85 people, destroyed the town of Paradise and 

resulted in billions of dollars in economic losses to the region. 

PG&E's recent management of the public safety power shutoffs did not restore 

public confidence. Instead, PG&E caused extreme uncertainty and harm for 

Californians who rely on power for their health care and for their livelihoods. For 

too long, PG&E has been mismanaged, failed to make adequate investments in 

fire safety and fire prevention, and neglected critical infrastructure. PG&E has 

simply violated the public trust. 

It is against this backdrop that compliance with AB l 054 must be measured. To 

access the state's wildfire fund, AB l 054 requires: 

• PG&E to resolve its insolvency proceeding by June 30, 2020; 

• The bankruptcy court to determine that the plan of reorganization 

fairly satisfies pre-petition wildfire claims; 

• The California Public Utilities Commission (the "CPUC") to determine 

that the reorganization plan and other documents are consistent with 

the state's climate goals and neutral, on average, to ratepayers; and 

• The CPUC to determine that the plan of reorganization, other plan 

documents, and the resulting governance structure be acceptable to 

the CPUC taking into account PG&E's safety history, criminal 

probation, recent financial condition, and other relevant factors in 

order for the reorganized company to access the wildfire fund. 

The CPUC's review of the plan of reorganization is not a rubber stamp - it is a 

critical component of AB 1054. 

To be approved under AB 1054, any plan of reorganization must position the 

emerging new entity for transformation. Such plan should include stringent 

governance and management requirements, enforcement mechanisms, and a 

capital structure that allows the company to make critical safety investments. In 

addition to the feedback set forth below, my team will provide your advisors 

with additional information to further clarify my views on specific features of the 

plan. 

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Governcnce end Mcnagement Requirements 

The resolution of this bankruptcy must yield a radically restructured and 

transformed utility that is responsible and accountable. To that end, my office 

previously informed you that any acceptable plan under AB l 054 must provide 

for major changes in governance and incorporate enforcement mechanisms. 

PG&E has failed to address most of the issues we previously raised on 

governance. 

The governance and enforcement mechanisms that I believe are necessary 

include the following: 

l. Changes that will result in a more qualified and independent board of 

directors that understands its obligation to achieve the goals of AB 

l 054. A transformed company should be governed by a board of 

directors selected based on a pre-determined set of qualifications, 

include members with extensive safety experience, and be comprised 

of a majority of Californians. To facilitate transformation, the board that 

will lead the reorganized company should be acceptable to me and 

approved by the CPUC and identified in the Amended Plan. I do not 

expect that the post-confirmation board of directors will include the 

current directors. 

2. Strict, clearly defined operational and safety metrics to which the 

reorganized company will be held accountable. 

3. An escalating enforcement process that provides for greater oversight 

of the reorganized company if it fails to meet the defined operational 

and safety metrics. Because of this company's history, the license to 

operate should be conditioned on it agreeing to this process. This 

should also include a streamlined process for transferring the license 

and the operating assets to the state or a third-party when 

circumstances warrant. 

4. Escalating enforcement should include governance changes that 

protect California in the event that the reorganized company fails to 

meet the operational and safety metrics or commits other bad acts 

including a subsequent bankruptcy filing. 

The Amended Plan does not incorporate any mechanisms to address these 

issues. Thus, I believe the Amended Plan falls woefully short of the requirements 

of AB l 054. 

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The Amended Plan must provide, as a non-waivable condition, that the 

confirmation order is entered by June 30, 2020 and the effective date occur by 

August 29, 2020. In the event either of these dates are not met, the Bankruptcy 

Court should appoint a chapter 11 trustee acceptable to the CPUC to manage 

the debtors and dispose of their assets and/or operations. 

Capital Structure 

To achieve safe and reliable service and make critical safety and infrastructure 

investments, the emerging company's capital structure must be stable, flexible, 

and position the company to attract long-term capital. Based on the financial 

information provided by PG&E, the reorganized company would not compare 

favorably to its peers on critical financial metrics. The Amended Plan also leaves 

the company with limited ability to withstand future financial and operational 

headwinds. 

These issues arise, in part, because the Amended Plan contemplates using a 

combination of holdco debt, secured debt, securitization, and monetization of 

the net operating losses in order to make plan distributions - leaving the 

reorganized entity with limited tools to finance itself when it needs to access 

capital to make billions of dollars in safety investments. I am also concerned that 

the Amended Plan relies on expensive and short-term bridge financing. All of this 

contributes to a reorganized company that, in my judgment, will not be 

positioned to provide safe, reliable, and affordable electric service. 

Without providing an exhaustive list of other issues, the Amended Plan must 

meet the AB 1054 requirements to treat victims fairly, including providing for the 

assumption of any pre-petition settlement agreements related to Fire Claims 

including the Butte Fire settlement. The Amended Plan should also provide that 

all environmental obligations and related agreements, all obligations and 

agreements related to the Diablo Canyon project, and all state tax obligations 

be assumed by the reorganized entity and be unimpaired. 

The state remains focused on meeting the needs of Californians including fair 

treatment of victims - not on which Wall Street financial interests fund an exit 

from bankruptcy. 

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PG&E's current plan is not feasible without access to the wildfire fund 

established under AB 1054. PG&E's board of directors and management have a 

responsibility to immediately develop a feasible plan. Anything else is 

irresponsi e, a breach o fiduciary duties, and a clear violation of the public 

trust. 

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