SACRAMENTO, Calif. — As the Dixie Fire continues to tear through more land and homes, it also consumed the value of PG&E’s settlement with victims of the company's previous wildfires.
PG&E's past wildfire victims own nearly 25% of the company's shares of stock, which lost about $230 million in value on Monday.
After falling nearly 7% in the morning, PG&E’s stock rebounded slightly to close 5% down at $8.75.
The stock was already worth less than victims were told during PG&E's bankruptcy case. After Monday's trading, victims were $2.5 billion short of the advertised $6.75 billion value of the stock in their settlement with PG&E.
“I would describe it as kicking someone while they’re down,” Will Abrams, a 2017 wildfire survivor who opposed PG&E’s bankruptcy plan, said. “Re-victimizing victims both personally and financially.”
The bankruptcy plan brokered for PG&E by Gov. Gavin Newsom last year paid the company’s past wildfire victims partly in cash and partly by turning them into major shareholders.
The Fire Victim Trust created in bankruptcy court owns about 478 million shares of PG&E.
GO DEEPER: This story is part of ABC10's FIRE - POWER - MONEY reporting project. New episodes air August 10, 11, and 12. If you have a tip that could reveal more about California's crisis with utilities and wildfires, please contact investigative reporter Brandon Rittiman at firstname.lastname@example.org.
Recently, PG&E reported to the California Public Utilities Commission [CPUC] that its equipment may have been involved in the start of the Dixie Fire, which is burning in the same mountainous canyon where the company’s negligence sparked the 2018 Camp Fire, the deadliest wildfire in state history.
As of Monday, July 26, the Dixie Fire had consumed 16 structures, forced many to evacuate, and scorched nearly 200,000 acres of Northern California, an area larger than the city limits of San Jose and Sacramento combined.
Heading into 2021 fire season, the Fire Victim Trust hadn't sold a single share of its PG&E stock, pointing to an issue that was apparently not considered when establishing the trust: income taxes on the increase in the stock value.
As of Monday, there was no increase left to tax.
PG&E’s stock price fell well below $9, its value when the company exited bankruptcy in July 2020 and gave shares to the victims. When the victims voted to approve the bankruptcy plan, they were told the stock would be worth an estimated $6.75 billion and that the value could go up or down.
But the stock was never worth that much. On the day PG&E exited bankruptcy, victims needed the stock price to climb another 56% to be made whole.
On Monday, July 26, the value dipped as low as $4 billion, almost $2.75 billion less than fire victims were told when they voted for the plan, the only one proposed to them in bankruptcy court.
Collectively, PG&E’s settlement covered damages for wildfires from 2015 through 2018, which resulted in the deaths of 131 people and destroyed more than 20,000 homes. In the 2018 Camp Fire, PG&E pleaded guilty to crimes including 84 felony manslaughters. PG&E declared bankruptcy after the Camp Fire, saying it was unable to pay all of its victims.
In the weeks before the Dixie Fire, which is now the subject of an ongoing criminal investigation, retired state appellate judge John Trotter, who oversees the trust, told victims that “it’s important for you to want PG&E to do well.”
Trotter assured the victims he serves as trustee that PG&E was a “new” company, a notion disputed in numerous ABC10 interviews with PG&E employees, current and former regulators, utility experts, victims, fire officials, and consumer advocacy groups.
If PG&E power lines are determined to have caused the Dixie Fire, it will mark five years in a row that the company has been named the cause of a major wildfire. The 2020 Zogg Fire killed an 8-year-old girl, her mother, and two others in Shasta County. That fire has PG&E under a new criminal homicide investigation. PG&E faces felony and misdemeanor charges in the 2019 Kincade Fire, which burned more than 100 homes and caused firefighter injuries.
“It’s devastating for victims of the PG&E fires and demonstrates why we should have never been compensated in PG&E stock,” Abrams said. “The notion that we are going to be cheerleading for PG&E because we happened to be forced to become shareholders is insulting.”
PG&E did not immediately respond to our request for comment.
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ABC10’s investigation found California politicians kept taking money from PG&E after the company pleaded guilty to 84 felony manslaughters. Evidence of PG&E’s crimes is beginning to come out and the company faces new criminal investigations for sparking deadly, destructive wildfires.