PG&E Declares Bankruptcy, What Could That Mean for Davis?

Map of the 27.49 acre PG&E Service site from 2008 Housing Element Update Report

Facing billions of dollars in potential liabilities from both the Camp Fire last November and the 2017 fires in the wine country, PG&E faces bankruptcy, but the utility is vowing to continue to provide electricity.

In an email to the city, John Costa told the mayor, council and staff, “Today, PG&E announced that it currently intends to file for reorganization under Chapter 11 on or about January 29.   We do not expect any impact to electric or natural gas service for our customers as a result of the Chapter 11 process.

“Importantly, we are not going out of business. Chapter 11 is a court-supervised proceeding that allows companies to reorganize their finances and resolve liabilities while continuing to operate their businesses.”

In a press release, they stated that “the Company is also committed to continuing to make investments in system safety as it works with regulators, policymakers and other key stakeholders to consider a range of alternatives to provide for the safe delivery of natural gas and electric service for the long-term in an environment that continues to be challenged by climate change.”

In a statement from Valley Clean Energy, they state, “Customers of Valley Clean Energy… need not fear an interruption in service following PG&E’s announcement Monday that it intends to seek bankruptcy protection.

“We’re watching these developments very closely,” said Mitch Sears, VCE’s interim general manager. “But PG&E has said it does not expect any impact to electric or natural gas service for its customers as a result of the Chapter 11 bankruptcy process. That is good news for our customers.”

But in other ways, this announcement could be a game-changer, particularly if PG&E were to decide to sell off assets in order to meet its financial obligation.

Of keen interest to many in Davis for years has been the 27.49 acres Service Center cite located on the southeast corner of Fifth and L Streets.  While long considered unattainable, it has often been cited as an ideal location for high density housing, mixed use development, or possibly a business park.

The city has engaged with PG&E over the years regarding an interest to re-use the site, but PG&E has already declined interest.  During the 2007 Housing Element Update process, the citizen-based steering community ranked the site No. 8 for potential re-purposing and re-development as housing.  It might have ranked even more highly had the site been viewed as possible.

There are some concerns about contamination of groundwater, although sources suggest that would probably be easily solvable should the site become available.  There are also questions as to whether the city would be able to purchase the site or it would have to be a private party – there are advantages and disadvantages to both.

Councilmember Will Arnold told the Vanguard, “Some compelling opportunities may indeed present themselves as PG&E proceeds down the path of bankruptcy. We at the City are closely monitoring the situation as it unfolds.”

Meanwhile, Dan Carson told the Vanguard, “Speaking only for myself, I do think we would want to explore whether PG&E is planning to dispose of or consolidate its operations, including its land next to our downtown.”

He noted, “If that were the case, it would also make sense to understand both the opportunities and any liabilities posed by acquisition of this key site as well as if there were any interest in private third parties in doing so, which could also benefit the city.”

He added, “It sounds like it will take some time for PG&E to emerge from the process of reorganization of its assets and that the Legislature and the PUC will also be involved. I suspect it will be some time before the path forward for the utility is clear.”

The prospects for purchasing or repurposing this property are not clear, but the door is now clearly open to that possibility, whereas in previous inquiries PG&E has not been interested in disposal of this asset.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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10 thoughts on “PG&E Declares Bankruptcy, What Could That Mean for Davis?”

  1. Alan Miller

    All that was said is well and good, just don’t see this as anything in the short term.  In  the very least, the site will have to be evaluated not only for groundwater, but soil.  Decades ago, large transformers were offloaded at the facility, for example.  In the very least, there will have to be years of evaluation, and PG&E will need to purchase and build another site for at least some of their operations.  This is a great location for a dense, creative neighborhood, but it’s been talked about for decades, and we aren’t even on Step 1 towards this becoming such.

    1. David Greenwald Post author

      The key thing is to get control of the property. The rest will happen in due course, but it becomes possible if PG&E sells it. This is a crack in the door to making the previously impossible a little more plausible.

    2. Richard McCann

      PG&E has built a large new facility in Winters for training, and there is additional land available there. On net, PG&E will make much more selling the Davis property.

  2. Don Shor

    although sources suggest that would probably be easily solvable should the site become available. 

    I can’t imagine how anyone would know that. I was told the same thing by ‘sources’ a decade ago, but the sources were all people who wanted the PG&E lot to be available for development. In other words, they were just dismissing the issue. They weren’t experts and hadn’t actually talked to any. We did weed abatement on the site in the 1980’s and there were significant portions where weeds never grew. That’s always a little disconcerting, as it suggests prior use of atrazine-based materials. I would say that the contamination issues with the PG&E site are unknown.

    1. John Hobbs

      ” I would say that the contamination issues with the PG&E site are unknown.”
      And some are a pretty safe bet. PCBs will be in the soil. They are not biodegradable and mitigation involves removal of all contaminated soil. $$$$$$$$$$

  3. Todd Edelman

    Please forgive me for predicting that some kind of transfer would be the result of a lawsuit, rather than re-structuring. There seems to be a lot of lot there that’s not used efficiently. As a good faith gesture of some kind, for the short-to-medium perhaps PG$E will open the gates and let the City tear up the asphalt, build a solar apparatus that heats up any non-contaminated material to re-melt for a local asphalt source, re-train employees to patch potholes and then plant sunflowers in all the newly naked land?

    There are also some non-profit organizations in Davis that could benefit with the installation of HVAC systems and hot water heaters, with free use of current.

    PG$E, to the tune of “ABC” by The Jackson 5.

  4. Dave Hart

    I’m sure there are executives in PG&E that are viewing the bankruptcy as a grand and unparalleled opportunity.  Like dumping the subject property and absolving themselves of all responsibility for cleanup.  They never could sell it without incurring huge costs that would probably eclipse the price of the sale under “normal” circumstances.  If the city gets involved, it would have to be at minimum a transfer for $1 for the entire parcel.  Even then, dangerous waters lie ahead.

    1. Alan Miller

      . . . and dangerous soils.
      Hazardous cleanup can be so expensive that even $1 is a net negative.  We just don’t know. 
      This economic negative creating a zero due to the expense of toxic substances cleanup is happening with a lot in my neighborhood.

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