Document Type

Thesis or dissertation

Date of this Version



Vincent Buccola


PG&E is widely regarded as the first climate-change caused Chapter 11 bankruptcy. Since then, numerous other investor-owned utility companies have declared bankruptcy due to climate disasters. Historically, due to the wide-reaching consequences of utility service disruptions to broader economic activity, state and local government officials have involved themselves in utility bankruptcies to ensure services continue and ratepayers are protected from drastic rate spikes.

This paper will explore what effect, if any, government involvement in utility Chapter 11s has on creditor recoveries, moral hazard, and incentive alignment. An event study of bond trading prices around the time of PG&E’s bankruptcy elucidates investor sentiment regarding climate and political economy risk present in the region. The study suggests that government intervention in PG&E caused investors of peer companies to view their investments as less risky. Finally, this paper explores potential solutions to manage climate damages in a way that decreases moral hazard.


Chapter 11 bankruptcy, Investor-owned utility, Climate change, Moral hazard, Climate risk, Bailout, Bond event study



Date Posted: 24 May 2023


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