The city of San Francisco wants to acquire assets and infrastructure of PG&E Corp. (PCG) for $2.5 billion but the latter rejected the bid to do so.
Utility company still ailing
Pacific Gas & Electric Co. CEO Bill Johnson said, while rejecting the city of San Francisco’s offer, said that the assets of the utility company were considerably undervalued. He said that this decision was not in the best interests of the customers of the company. Johnson shared his concerns with Dennis Herrera, the City Attorney, and London Breed, the Mayor of San Francisco.
The bankrupt utility company is having a hard time dealing with the fallout. According to Johnson, the company’s financial strategy to pull itself out of bankruptcy didn’t mention the sale of its assets.
“Although we cannot accept your offer, we want to clearly communicate that PG&E intends to continue working with the City to best serve the citizens and businesses of San Francisco,” he wrote.
What happens next?
The initial offer for the acquisition of the utility company’s assets was made in September this year. The company filed for Chapter 11 bankruptcy protection at the beginning of the year. Herrera and Breed suggest that the city still intends to acquire the electrical assets of the company.
They even blamed the company for acting inconsistently with the city’s comprehensive analysis of its business. However, they said that PG&E’s response doesn’t surprise them and added that the city is not giving up so easily. It will strive to gain control of the electric services of the city’s and ensure that San Francisco is independent in terms of energy.
PG&E chief Johnson met Herrera and Breed in September. He noted in his letter that the company didn’t accept the city’s proposal to buy its assets. He clarified that the company’s San Francisco assets are “not for sale” and that letting the city acquire all its infrastructure will be inconsistent with its charter to provide energy to communities in Central and Northern California.
On October 10th, the company cut off the power to about 600,000 of its customers in Northern California, including the Bay Area. These residents could be living without electricity for days. The company’s move has raised many eyebrows and both the customers and authorities are angry at this unusual decision. Though Governor Gavin Newsom said that the company’s decision was appropriate given the current circumstances, it should have invested more in upgrading its infrastructure and ensuring the safety of its power lines.