A year after PG&E Corp. funded a trust to compensate victims of California wildfires with company stock, most have yet to be paid, and the shares have fallen in value after the utility acknowledged it might have started this year’s worst fire.
As part of its plan to exit bankruptcy last year, the San Francisco-based company agreed to use cash and stock to fund a $13.5 billion trust to compensate roughly 70,000 individuals who lost homes, businesses and family members in fires sparked by its equipment. Some victims expressed concern at the time that the deal carried steep risks for them, noting that the shares weren’t guaranteed to rebound and could fall if PG&E started more fires.
Those concerns so far have proved prescient. PG&E shares are worth approximately the same as when the trust was funded, threatening victims’ ability to receive full compensation. Their value is down roughly 25% this year and fell steeply last month when the company disclosed that its equipment might have ignited this summer’s continuing Dixie Fire, which has consumed nearly 490,000 acres in the Sierra Nevada foothills and destroyed the town of Greenville.
So far, the trust has made partial payments to fewer than 3,300 victims, or less than 5% of the total. It had distributed about $600 million in cash to victims at the end of July, nearly half of which amounted to preliminary payments to help victims address acute hardships, records show. It hasn’t sold any stock to help make payments as it grapples with challenges in estimating claims as well as unforeseen tax issues. Its assets are now worth around $10 billion.
A retired federal judge overseeing the trust said the tax and other issues are being resolved, and he expects it could begin selling company shares sometime next year. The trust faces restrictions in how much it can sell at one time, given its large ownership stake. With 478 million shares, the trust owns more than 20% of PG&E, making it the company’s largest shareholder.