Home in Ashes, They’re Forced to Fight for Share of PG&E Money

Unfortunately through inverse condemnation PG&E has become the insurer of last resort in California. For a utility to carry that burden it is not surprising that they declared bankruptcy. It was PG&E first, next up will be SCAL Edison and then San Diego Gas & Electric.

Isn't this why people have insurance. Your house burns down, the insurance company cuts you a cheque and then goes after those responsible, if there are any. What percentage of that $30-50 billion is going to legal fees? What company is going to operate as a utility in a state where they can go bankrupt at the drop of a hat? I don't doubt that PG&E's practices contributed to its problems, but there are many inconvenient truths here that remain unanswered.

I think many here don’t know what the obligations are when a mortgaged home burns: “A standard Fannie Mae or Freddie Mac mortgage form—also used for most jumbo loans...requires the borrower to repair or restore the property, if economically feasible, unless the lender and borrower otherwise agree in writing... For borrowers who plan to rebuild, insurance proceeds are generally held in escrow by the lender or loan servicer and disbursed according to a schedule as construction progresses... But jumbo borrowers, or those with substantial savings or low mortgage balances, may opt to pay off the mortgage directly...” —from Realtor.com

I don’t see anyone commenting on this statement, which I find outrageous: “The $235 million budgeted for the 2019 bonuses is 81 percent more than the $130 million that the company had sought to pay out for 2018 before withdrawing the proposal.” PG&E creative accounting!

It's bad enough that people who have legitimate claims against the company are waiting for their money--or may never receive it--but to pay employees bonuses during bankruptcy proceedings is just horrible. Someone made bad decisions that led to these fires. They should lose their jobs rather than get bonuses.

"PG&E filed a motion last week asking the bankruptcy court in San Francisco to approve the payment of $235 million in employee cash bonuses this year." you have got to be kidding me....

They should have bought the he new house first then send the keys to the old house to the bank.

So, PG&E, through, at best, negligence, is responsible for tens of billions of dollars in damages and the loss of scores of lives. Let's imagine the outcomes from this... How many of PG&E's executives will go to jail? Likely zero. How many of PG&E's executives will lose their jobs? Likely zero. How much restitution will PG&E ultimately end up paying for the damage and deaths they caused? Likely a few pennies on the dollar. This is yet another example of what's deeply wrong with our country -- corporations and their shareholders and their executives not being held accountable, at the dire expense of a multitude of average Americans. This has to change.

Why should the employees receive their bonuses now? Is there a solid basis to pay these bonuses? Earnings from operations is typically based on smoke and mirror maneuvering to achieve an "earnings" number. If the union covers all employees, it should have pressured PG&E to pay the bonus before the bankruptcy declaration. Otherwise the employees should get in line with the rest of the unsecured creditors. As for the wildfire liabilities, I guess PG&E will use bankruptcy to avoid paying the McKeowns and anyone else with whom it has made a settlement.

It seems high time to ask ourselves and our electeds why any utility should be private. Investor-owned utilities are no better run than public utilities; they charge more, and they're less accountable to their customers. Nobody should be surprised to learn that PG&E was cutting operating costs and safety measures--the profit motive demands no less. In all likelihood, the State of California will backstop their recklessness, and they'll continue with business as usual. "Too big to fail" isn't contained to Wall Street, alas.

After the Cedar Fire in San Diego County I built a new home for a family that lost their home in the fire. Twelve months after this family lost their home they moved into a new home, paid for by their insurance policy. And by building the same size house in square feet, the permit fees, and impact fees were waived.

The insurance went to pay off the mortgage. So it seems that the McKeowns were either underinsured or over mortgaged? That was their choice and they are suffering the consequences of poor planning. I live in a wildfire-prone area, so I know how expensive it is to insure your home for replacement value. Living in expensive California, I am well aware of how tempting it is to take equity out of your value-inflated home and carry a huge mortgage (primary or secondary), or to overbuy in the first place. I saw too many people lose that game in the mortgage meltdown of 2008! I pay a huge rate for replacement-value insurance, and in exchange I do without things I would rather spend the money on. But that is the price of living where I do. I’ve come close to losing my house to wildfire twice in a couple decades. I know several people who did lose their homes to fire. And what I know is that you can wait for an eon and a half before you get a settlement from a public utility. It has always been this way. Many who lost homes in these huge fires end up selling their scorched lots to developers, who offer money up front and an escape from the frustration. The developers are seen as vultures, but in a way they offer a useful service. Some heavily insured, responsible homeowners in disaster-prone areas in California are being dropped by their insurers. People who have never filed claims. That is a more frightening prospect for me than having to deal with PG&E after a fire.

“The McKeowns had insurance, but the proceeds were used to pay off the mortgage on their destroyed home. They had counted on the settlement with PG&E to finance a new one.” So they misused their insurance funds. Whose fault is that? They simply wanted to get out of this with a free house, and it didn’t pan out. Should have made a different decision. It’s amazing how many of these sob stories crumble under the slightest scrutiny.

Why can't the McKeowns take out a new mortgage? Who told them that this tragedy would turn into a golden ticket: no mortgage and a free house? I'm incredibly sympathetic to what they survived but there's some key information missing.

They obviously did not have enough insurance. Their fault.

The PUC allows PG$E to make a 10% proffit on all operting costs. PG$E does all it can to inflate costs so that the 10% proffit is as large as possible. With overtime linemen make about $150,000.00 a year. The fines from the San Bruno explosion were passed on to the ratepayers.

It's not all PG&E's fault. I live in a flat, modest-sized town where my house is unlikely to be damaged by flood, and certainly not by forest fire. People who want to live in the woods have to accept the increased danger. The choices we make in life matter.

Most large corporations have performance bonuses simply to cut down on the cost of benefits. Basic life insurance, accrued vacation, 401k contributions, pension benefits, health insurance. For most employees “performance bonuses” are really just market based pay.

In our tiny corner of the Pacific Northwest where our entire area could be defined as a wildland interface, we have one of the oldest continually operating MUTUAL power companies in the nation. Over the past ten years, our not for profit electric utility has focused on reliability. Even with more wind and snow this year than normal, our power outages were minimal and quickly recovered. We are counted amongst the highest reliability rankings in the country. Our power company is not focused on profit, it is focused on reliability and safety. Not incidentally and partly due to our hydro power, we also have one of the lowest electric rates in the country. Oh, and did I mention that our service areas spans miles and trees and salt water? Gives a person pause.

A seven figure settlement with PGE? What kind of a house did they live in? And how do you have homeowner's insurance that will only pay off your previous mortgage? That's called mortgage insurance. It sounds like this family did not have real insurance coverage. This story presumes that the family deserves something here. A power line starts a fire in a wooded area so the whole power company is forced into bankruptcy because they owe everyone huge dollars?

At best, the CPUC will see that changing design conditions for power lines and the revolving door between regulator and regulatee helped PG&E get stuck with this tragedy. Let's say, the recommendations of PG&E's small army of risk experts could not overcome its profit motive. Not defending the company, but they are doing what we collectively expect corporations to do. If we were smart about risk/reward to the public we voters would lobby for changing the rules and require these companies to be B-corps or even non-profits. Still plenty of profit to go around under those models.

Oversight. Oversight. Oversight. That’s what’s lacking. U.S. citizens - prey to lack of US oversight! The disgusting thing is that it may take share-holders and bond-holders to draw attention to what’s affection hundreds and hundreds of former home owners. Citizens are PREY now. Prey to corporate greed, to oligarchs able to buy politicians, who prevent oversight and loosen regulations and pray to the God of MONEY.

This article mentions a lot of money in lost bonuses....more than some small economies! But not once did your article even allude to the fact that ultimately we know the cause of the fire: human beings moving into interface areas, encroaching on natural habitats, in order to be IN nature, and all the while they drag their needs (power company trucks) up the hills and into the woods with them. I am sympathetic to a degree for the loss of life and the financial devastation suffered by these people; none-the-less, their choices to overpopulated an area are the real cause of the fires. California, and Southern California in particular, is where people are destroying the planet, and inflicting harm on their neighbors....where does their water come from? Whole rivers are dried up to fill pools, and that is not a cliché. We can focus on how California is on the cutting edge of environmental laws, and they are, but articles like this make the massive over-population of the American Southwest not seem to be the result of conscious choices. People choose to live in the path of fire, then set up all the ingredients for a catastrophe by their lifestyle. It's been disgusting to watch honestly. I speak as a lifelong citizen of a state under similar distresses, suffering the influx of migrating Californians, among others, and as a former wild-land firefighter.

PG&E is certainly in the throws of hiding their money much like Perdue Pharma who has hinted at bankruptcy for intentionally murdering people with pain killers. These companies aren't ashamed of destroying folks lives. They just want to make sure they get to keep their billions. They will create LLCs and send monies offshore. It is time to enact monopoly laws that prevent these companies from becoming pariahs and monsters. My heart goes out to the poor people who have lost everything and may the right thing be done for them.

Waaa. Waaa. Waaa. Eliminating his bonus will cost him 10%. Thousands of people lost everything they owned. Many people died. His company's negligence caused all this damage and he thinks he deserves a bonus. What a shameless man.

Wilbur Ross might recommend that this family take out a loan against their expected return from PG&E. Unfortunately, if they could get that type of loan it would certainly be for only a fraction of what they might recover, and would likely carry a high interest rate. But it might help them get out of the trailer.

We lost our home in the recent Camp Fire, so I understand a bit of what the McKeowns are going through. However. There is plenty of greed and stupidity to go around in this story. Regarding PG&E, it is a company that is regulated as if it was a utility, but permitted to behave towards employees and investors as if it was a private company (which it is). I work for a large (for the area) manufacturing company near Paradise. We REGULARLY lose industrial electricians to PG&E -- getting a job there is a little like winning the lottery, from their point of view. They get unbelievable vacation, pension (who has one of those anymore?), salary, overtime etc. Private sector companies cannot compete. I have little doubt that the engineer quoted in the story earns more than me and my wife combined. Certainly the electricians earn do. On the topic of the McKeowns and their 7 figure (?!) settlement, this is one excellent reason why PG&E has declared bankruptcy. It is the responsibility of the homeowner to have adequate insurance (they apparently did not). It is nice, for them, that they had a good lawyer and were able to get a judge to agree that their losses (?) suffering (?) were worth >10 million. But this is ridiculous, in my view. I don't want to make it sound like PG&E ought to be held blameless. They've dragged their feet for decades on 'hardening' their power distribution system. There are examples in other states (CO, for one) that have had success in this.

As usual folks in Cal want it both, saddle PGE with questionable liabilities for the fire and then get angry b/c the corporation is trying to protect itself so it can stay in business and sell electricity.

So the McKeown’s were under insured and could not afford to rebuild. PGE should be held responsible for their losses but their own neglect leaves them living in trailer. If they had been properly insured they would have already rebuilt their home and their insurance would be the ones waiting for a payout by PGE.

I used to work at PG&E until a few years ago. The employees should get their STIPs. Lots of great people are already going out the door, and not paying STIP is a great way to lose everyone else. Electricity is a fundamental need and the grid doesn't work without qualified and trained staff to keep the lights on. PG&E is certainly not blameless, but these communities built in high-risk areas at the urban/forest interface. Either higher insurance requirements are needed or the State needs to step in an provide the backstop insurance. Wildfires are a normal part of CA's ecology but they have been suppressed for decades, creating a climate change fueled tinderbox. In my view people should either not live there, or at least not expect to be fully compensated when their homes burn, unless they are willing to pay for full replacement value insurance.

While everyone assumes that PGE would be liable for the Paradise fire, this has never been legally established. Even without bankruptcy it could be years for legal proceedings to establish liability.

Should the tragic deaths of 85 people (and other destruction) really force a company that provides power - to hospitals, to police stations, to water treatment plants, to sewer plants - into bankruptcy? There is liability that is just, and then there is the situation we find ourselves in with PG&E and the medical world, as another example. Claims in lawsuits are enormous to a degree that they are degrading the system as a whole. I sympathize immensely with the victims, but there has to be a balance here to avoid that degradation.

How can a PG&E employee possibly accept a bonus knowing the money is essentially being taken out of the pockets of the company’s victims? How is setting up such a moral conundrum supposed to retain employees? I’m not surprised when a bunch of bank executives steal money from their victims to pay bonuses to themselves, but a public utility? And the courts just play along with this? Disgusting.

Sad story but why didn't these people have their own fire insurance?

"PG&E filed a motion last week asking the bankruptcy court in San Francisco to approve the payment of $235 million in employee cash bonuses this year." Unbelievable! Where is the public outrage?

Meanwhile, check out the salaries of the top executives at PG&E. Has even one of them offered a dime to wildfire victims? https://www1.salary.com/PG-E-CORP-Executive-Salaries.html

It sounds like the family bought the wrong type of house insurance. What they had covered the mortgage only (protecting the bank). Most home insurance covers the house, its contents and expenses to live somewhere else while your house is being rebuilt or repaired. I wouldn't be surprised if the bank that held the mortgage also sold them or arranged for the insurance.

This is a sad story. Can't the state or federal government provide proper housing for families whose homes were lost to wild fires such as the McKeowns and those affected by the Camp Fire. In my opinion, the raging fires in California were a real emergency. Those affected need the federal funds to construct walls for their replacement homes. I find it strange politicians are squabbling over funds to construct a wall in the desert. I pity those McKeowns kids. They really need a safe place. I wish them well.

Wait, what? The poster child for sympathy received an insurance settlement that covered their losses. But instead of using that to rebuild, they paid off their mortgage. Now, they want the electric rate payers of the state to pay them an additional amount so that they can live mortgage free. Why is that a good idea?

With all due respect to the McKeowns, it sounds like they were underinsured on their property. Why not insure for the full replacement value of the home? And in regard to the issue of PG&E, the media continues to fan the flames. When PG&E starts cutting down trees under lines the headlines read "Has PG&E gone too far??" Then a campaign fire occurs and the headlines blare that PG&E has "done it again." The real winner in this cycle is the insurance industry, which should be carrying the burden for these fires but has avoided it with their help from the newspapers. The true cost of living in rural areas that are prone to these increasingly common fires, should be calculated, negotiated and contracted between insurance providers and homeowners who chose to live there. Until that is the case, PG&E will continue to be scapegoated and all of their customers, myself included, must pay for this folly.