A rash of severe wildfires left a large utility company with an estimated $30 billion of liabilities as well as mandated investments in system hardening, inspections and repairs, and vegetation management. While being a national leader in renewables, the utility was locked into noncompetitive supply contracts and governed by cost-ineffective union arrangements. AlixPartners came on to guide the company through Chapter 11 proceedings, taking an integrated approach to transforming the company’s operations at the same time.
We evaluated third-party purchase contracts, created an internal reorganization plan, and put into play a comprehensive cost reduction plan to reduce capital and operating expense by $1.5 billion annually. One of our interim specialists served as chief restructuring officer during this period, preserving shareholder equity while leading cost-reduction efforts. The result was a streamlined operational model with greater oversight and strategic allocation of capital to continue to grow the company’s value. In the long term, the company restored trust and will see ongoing savings of roughly $7 billion through 2025